The Rise of the East and the Far East: German Labor Markets and Trade Integration

Wolfgang Dauth, Sebastian Findeisen and Jens Suedekum

No 6685, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze the effects of the unprecedented rise in trade between Germany and "the East" – China and Eastern Europe – in the period 1988–2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of "the East" in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships.

Keywords: Eastern Europe; local labor markets; export opportunities; international trade; import competition; China; employment; Germany (search for similar items in EconPapers)
JEL-codes: F16 J31 R11 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2012-06
New Economics Papers: this item is included in nep-eur, nep-geo, nep-int, nep-lab and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Published - revised version published in: Journal of the European Economic Association, 2014, 12 (6), 1643-1675

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Related works:
Journal Article: THE RISE OF THE EAST AND THE FAR EAST: GERMAN LABOR MARKETS AND TRADE INTEGRATION (2014)
Working Paper: The rise of the East and the Far East: German labor markets and trade integration (2013)
Working Paper: The rise of the East and the Far East: German labor markets and trade integration (2013)
Working Paper: The rise of the East and the Far East: German labor markets and trade integration (2012)
Working Paper: The Rise of the East and the Far East: German Labor Markets and Trade Integration (2012)
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