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Labor Market Adjustment to Third Party Competition: Evidence from Mexico

Raymond Robertson, Timothy Halliday and Sindhu Vasireddy ()

No 201801, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: China’s exports reduce wages in importing countries, but few studies have looked at competition in third party markets. We examine labor market outcomes in Mexico's apparel and textile sectors associated with U.S. apparel and textile imports from China. Using the Bartik (1991) approach, we find that U.S. imports from China are associated with a reduction of wages and employment in Mexico’s textile and apparel sector. Our results suggest that the adjustment to falling labor demand had larger effects on employment, which is consistent with relatively small firm-level employment adjustment costs, and that low-wage workers are more tied to local markets.

Keywords: Apparel; China; Mexico; Trade; Wages; Inequality (search for similar items in EconPapers)
JEL-codes: F16 J31 (search for similar items in EconPapers)
Date: 2018-05
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