Regional Divergence and Import Competition

Javier Quintana González

No 03-2018, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

Abstract: For the last decades, regions in the United States have been diverging. More skill-intensive regions have experienced a higher wage and skill premium growth and have become even more skill-intensive. In this paper, I show that this may be driven in part by trade with China. One of the main findings of this paper is that the consequences on local labor markets of higher income competition are highly heterogeneous. In particular, I focus on how consequences of imports from Chinese manufacturers are different depending on the share of college-educated workforce in the regions. Conditional to be exposed to the same level of import competition, effects in terms of wages and growth of college-educated population growth are especially negative for less educated regions. However, this finding does not mean just an attenuation of negative effects for some educated areas. Instead, I find that import competition has net positive effects among more college-educated regions. Indeed, among more skill-intensive regions, a greater exposure to import competition attracts college-educated workers and increases college-wages and skill premium; whereas it has opposite effect among less skill-intensive regions.

Keywords: international trade; import competition; regional inequality; college premium; internal migration; skill sorting; factor mobility (search for similar items in EconPapers)
JEL-codes: F14 F16 F66 I24 J24 J31 R12 (search for similar items in EconPapers)
Pages: 277
Date: 2018-11, Revised 2018-11
New Economics Papers: this item is included in nep-int, nep-lma and nep-ure
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