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Trade competition and migration: Evidence from the quartz crisis

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  • Twinam, Tate

Abstract

Foreign competition and technological change can both present threats to domestic industries, potentially resulting in out-migration from cities and regions where these industries are spatially agglomerated. In this paper, I study the migration effects of one such trade shock: The quartz crisis, which devastated the globally dominant Swiss watch industry in the 1970s. Using a differences-in-differences strategy, I show that this trade shock led to a rapid loss of population in affected areas, and a long-run change in growth patterns. This contrasts with many other studies of large trade shocks, which find little migration response. I highlight three key factors that distinguish this shock from others and may explain the divergence: (1) the crisis negatively impacted a key export industry while generating no offsetting gains, (2) the affected labor markets were highly non-diversified, and (3) the affected workers were highly mobile.

Suggested Citation

  • Twinam, Tate, 2022. "Trade competition and migration: Evidence from the quartz crisis," Journal of International Economics, Elsevier, vol. 138(C).
    • Handle: RePEc:eee:inecon:v:138:y:2022:i:c:s002219962200085x
    DOI: 10.1016/j.jinteco.2022.103653
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    1. Zhang, Haoran, 2023. "Coal busts and urban recovery: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 101(C).

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    More about this item

    Keywords

    Trade competition; Technological change; Migration;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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