Competing with the Dragon: Employment Effects of Chinese Trade Competition in 17 Sectors Across 18 OECD Countries

Abstract

China’s rapid rise on the global economic stage has substantial and unequal employment effects in advanced industrialized democracies given China’s large volume of low-wage labor. Thus far, these effects have not been analyzed in the comparative political economy literature. Building on pooled time-series data, we analyze the effects of Chinese trade competition across 17 sectors in 18 countries. We devote attention to a new channel, increased competition from China in foreign export markets. Our empirical findings reveal overall employment declines in sectors more exposed to Chinese imports. Furthermore, our results suggest that employment effects are not equally shared across skill levels, as the share of hours worked worsens for low-skilled workers.

Keywords: globalisation, export competition, employment, labour markets, sectors

JEL Classification: C23; C53; F14; F16; F60; J21