Short- and Long-Run Labor Market Adjustment to Import Competition

Juan Blyde, Matias Busso, Kyunglin Park and Dario Romero

No 12658, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: By exploiting spatial variation in import exposure arising from initial differences in industry specialization, we analyze how local labor markets in Mexico adjusted to increased Chinese-import competition over different time horizons. The initial adjustment to the shock took various forms: a decline in the number of wage employees, a substitution of wage employees with piece-rate or outsourced workers, and a substitution of formal employees with informal employees. The negative effects on employment were mainly associated with job destruction from exiting firms, particularly those that were small and medium-sized. During periods in which employment fell, the population that actively participated in the labor force fell. The negative short- and medium-run effects mostly disappeared after 20 years.

Keywords: import competition; local labor markets; Employment; Mexico (search for similar items in EconPapers)
JEL-codes: F14 F16 J23 (search for similar items in EconPapers)
Date: 2023-01
New Economics Papers: this item is included in nep-cis
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Citations: View citations in EconPapers (3)

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Journal Article: Short‐ and long‐run labor market adjustment to import competition (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:12658

DOI: 10.18235/0004703

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