“U.S. job flows and the China shock”

“U.S. job flows and the China shock”

Brian Asquith, Sanjana Goswami, David Neumark and Antonio Rodriguez-Lopez

In: Journal of International Economics, Vol. 118, May 2019, Pages 123-137

International trade exposure affects job flows along the intensive margin (from expansions and contractions of firms’ employment) as well as along the extensive margin (from births and deaths of firms). This paper uses 1992–2011 employment data from U.S. establishments to construct job flows at both the industry and commuting-zone levels, and then estimates the impact of the ‘China shock’ on each job-flow type. Using the two most influential measures of Chinese exposure, Asquith et al. find that the China shock affects U.S. employment mainly through deaths of establishments. At the commuting-zone level, we find evidence of large job reallocation from the Chinese-competition exposed sector to the non exposed sector. Moreover, the authors demonstrate that the job-flow effects of the China shock are fundamentally different from those of a more general adverse shock affecting the U.S. demand for domestic labor.