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Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad

Sonia Cabral (), Pedro Martins, João Pereira dos Santos () and Mariana Tavares ()
Additional contact information
João Pereira dos Santos: Nova School of Business and Economics
Mariana Tavares: Maastricht University

No 11790, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: The increased range and quality of China's exports is a major ongoing development in the international economy with potentially far-reaching effects. In this paper, on top of the direct effects of increased imports from China studied in previous research, we also measure the indirect labour market effects stemming from increased export competition in third markets. Our findings, based on matched employer-employee data of Portugal covering the 1991-2008 period, indicate that workers' earnings and employment are significantly negatively affected by China's competition, but only through the indirect 'market-stealing' channel. In contrast to evidence for other countries, the direct effects of Chinese import competition are mostly non-significant. The results are robust to a number of checks and also highlight particular groups more affected by indirect competition, including women, older and less educated workers, and workers in domestic firms.

Keywords: international trade; labour market; matched employer-employee data; China; import competition (search for similar items in EconPapers)
JEL-codes: F14 F16 F66 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-int and nep-lma
Date: 2018-08
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