Competing with the Dragon: Employment and Wage Effects of Chinese Trade Competition in 17 Sectors Across 18 OECD Countries
LIS Working Paper Series No. 623
26 Pages Posted: 28 Nov 2014
Stefan Thewissen
Leiden University - Department of Economics, Students
Olaf van Vliet
Leiden University - Leiden Law School; Leiden University - Department of Economics
Date Written: November 1, 2014
Abstract
The rapid rise of China on the global economic stage could have substantial and unequal employment and wage effects in advanced industrialised democracies given China’s large volume of low-wage labour. Thus far, these effects have not been analysed in the comparative political economy literature. Building on new pooled time-series data, we analyse the effects of Chinese trade competition across 17 sectors in 18 countries between 1990 and 2007. Our empirical findings reveal overall employment declines and higher earnings inequality in sectors more exposed to Chinese imports. We devote particular attention to a new channel, increased competition from China in 59 foreign export markets, which positively affects the high-skilled whilst the low-skilled bear the brunt. Hence, this study shows that neglecting the competition in foreign countries leads to underestimation of the distributive effects of trade. More generally, our findings provide new insights into how international trade, technological change, and labour market institutions contribute to the widely observed trend of rising inequality.
Keywords: globalisation, export competition, wage inequality, labour markets, sectors
JEL Classification: E24; F14; J30; O33
Suggested Citation: Suggested Citation
Stefan Thewissen
Leiden University - Department of Economics, Students ( email )
Netherlands
Olaf Van Vliet (Contact Author)
Leiden University - Leiden Law School ( email )
Steenschuur 25 PO Box 9520
Leiden, 2300 RA
Netherlands
HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html
Leiden University - Department of Economics ( email )
P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands
HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html
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