The Review of Economics and Statistics Vol. 100 No. 4 2018
Workers beneath the Floodgates: Low-Wage Import Competition and Workers’ Adjustment
Abstract
Using employee-employer matched data, I analyze the impact of a low-wage trade shock on manufacturing workers in a high-wage country, Denmark, and how they adjust to the shock over a decade. I derive causal effects by exploiting the dismantling of the Multifiber Arrangement quotas on products from China upon its WTO accession as a quasi-natural experiment and use within-industry, within-occupation heterogeneity in workers’ exposure to this shock. I find significant negative long-run effects on earnings and employment trajectories and identify job instability in the service sector as a main adjustment friction, concentrated among workers with manufacturing-specific education and occupation. The results establish the importance of specific human capital in trade adjustment and provide evidence of skill upgrading as workers rebuild lost human capital through education.
- DOI
- 10.1162/rest_a_00727
- Volume
- 100
- Issue
- 4
- Pages
- 631-647
- Language
- en
- Sources
- openalex crossref