Competing with the dragon: Employment and wage effects of Chinese trade competition in 17 sectors across 18 OECD countries

Stefan Thewissen and Olaf Vliet

No 623, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: The rapid rise of China on the global economic stage could have substantial and unequal employment and wage effects in advanced industrialised democracies given China’s large volume of low-wage labour. Thus far, these effects have not been analysed in the comparative political economy literature. Building on new pooled time-series data, we analyse the effects of Chinese trade competition across 17 sectors in 18 countries between 1990 and 2007. Our empirical findings reveal overall employment declines and higher earnings inequality in sectors more exposed to Chinese imports. We devote particular attention to a new channel, increased competition from China in 59 foreign export markets, which positively affects the high-skilled whilst the low-skilled bear the brunt. Hence, this study shows that neglecting the competition in foreign countries leads to underestimation of the distributive effects of trade. More generally, our findings provide new insights into how international trade, technological change, and labour market institutions contribute to the widely observed trend of rising inequality.

Keywords: globalisation; export competition; wage inequality; labour markets; sectors (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-11
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published in o Political Science Research and Methods, (2017): 1-18. https://doi.org/10.1017/psrm.2017.35

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