Import competition from China and unemployment. An analysis using Spanish workers’micro-data

Vicente Donoso (), Víctor Martín and Asier Minondo ()
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Vicente Donoso: Instituto Complutense de Estudios Internacionales (ICEI) Universidad Complutense de Madrid.

No 1405, Working Papers del Instituto Complutense de Estudios Internacionales from Universidad Complutense de Madrid, Instituto Complutense de Estudios Internacionales

Abstract: In the period 1997-2011, import competition from China multiplied by five in the Spanish manufacturing sector. In this paper we analyze whether this severe increase in import competition from China is associated with a higher probability of becoming unemployed in the Spanish manufacturing sector. Linking industry-level data on imports with the working histories of 141,000 manufacturing workers, we show that import competition from China is positively associated with the probability of becoming unemployed. In particular, a standard deviation increase in import competition from China raises the probability of becoming unemployed between 0.8 and 3.5 percentage points, which represents between a 9% and a 44% increase relative to the unconditional probability of becoming unemployed. In contrast, we do not find any effect of import competition from China on manufacturing wages. Also, our estimations show that there is weak evidence of a positive association between a higher import competition from China and the probability of switching to an employment outside the manufacturing sector. Keywords: Imports; China; Spain; Unemployment; Skills; Manufacturing.

Pages: 31 pages
Date: 2014
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