China Syndrome and Local Labor Markets: Sectoral Reallocation and Job Quality

Jaehong Choi, Hyunbae Chun, Jung Hur and Nyeong Seon Son

The World Economy, 2025, vol. 48, issue 5, 1043-1059

Abstract: This paper examines the impact of Chinese import exposure on labour reallocation between the manufacturing and service sectors and its implications for job quality. To conduct this study, we focus on South Korea, an OECD country with the lowest labour productivity in the service sector compared to manufacturing. Our findings reveal that Chinese imports have led to employment shifts from manufacturing to the service sector within local labour markets. Additionally, exposure to Chinese imported products has decreased employment in non‐routine tasks and increased employment in routine tasks, resulting in a decline in job quality. These results suggest that in countries where the service sector is less productive than manufacturing, labour reallocation driven by Chinese imports can further exacerbate job quality issues.

Date: 2025
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