When the Floodgates Open: "Northern" Firms' Response to Removal of Trade Quotas on Chinese Goods

Hale Utar

American Economic Journal: Applied Economics, 2014, vol. 6, issue 4, 226-50

Abstract: Using the dismantling of the Multi-fibre Arrangement quotas on Chinese textile products in conjunction with China's accession to the World Trade Organization (WTO), within firms adjustments to intensified low-wage competition is analyzed. Employing Danish employer-employee matched data covering from 1995 to 2007, the analysis shows a significant change in the workforce composition of firms in response to heightened competition. Competition is found to negatively affect employment, value-added, and intangible assets of the Danish firms, and firms refocus away from products, where China's competitive advantage becomes higher. The results show an important role of the distributional impact of low-wage competition within firms in restructuring the industry.

JEL-codes: F13 F14 F16 L25 L67 P33 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/app.6.4.226
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Citations: View citations in EconPapers (73)

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