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Labor Market Adjustment to Import Competition: Long-Run Evidence from Establishment Data

Author

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  • Blyde, Juan S.
  • Busso, Matías
  • Romero, Dario

Abstract

We analyze how local labor markets in Mexico adjusted in response to an increase in Chinese import competition between 1998 and 2013. We exploit the spatial variation in import exposure arising from initial differences in industry specialization. We found that the adjustment took various forms: a decline in the number of wage employees, the substitution of some wage employees by contract workers, and the substitution of formally contracted employees by informally contracted ones. The reduction in employment levels was accompanied by an increase in the population that exited the labor force. The negative employment impact was three times more severe on production workers than on nonproduction workers, indicating that workers with lower skills were more severely affected. Overall, we find significant job losses to the order of 7.6% of the working-age population.

Suggested Citation

  • Blyde, Juan S. & Busso, Matías & Romero, Dario, 2020. "Labor Market Adjustment to Import Competition: Long-Run Evidence from Establishment Data," IDB Publications (Working Papers) 10097, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:10097
    DOI: http://dx.doi.org/10.18235/0002148
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    Citations

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    Cited by:

    1. Alejandro Estefan & Roberto Gerhard & Joseph P. Kaboski & Illenin O. Kondo & Wei Qian, 2024. "Outsourcing Policy and Worker Outcomes: Causal Evidence from a Mexican Ban," Opportunity and Inclusive Growth Institute Working Papers 084, Federal Reserve Bank of Minneapolis.
    2. Muftah Faraj & Murad Bein, 2022. "Sustainability of Local Labour Market in South Africa: The Implications of Imports Competition from China," Sustainability, MDPI, vol. 14(12), pages 1-18, June.
    3. Puggioni Daniela & Calderón Mariana & Cebreros Alfonso & Fernández León & Inguanzo José A. & Jaume David, 2022. "Inequality, Income Dynamics, and Transitions of Mexican Workers," Working Papers 2022-14, Banco de México.
    4. Emilio Gutierrez & David Jaume & Martín Tobal, 2023. "Do Credit Supply Shocks Affect Employment in Middle-Income Countries?," American Economic Journal: Economic Policy, American Economic Association, vol. 15(4), pages 1-36, November.
    5. Daniela Puggioni & Mariana Calderón & Alfonso Cebreros Zurita & León Fernández Bujanda & José Antonio Inguanzo González & David Jaume, 2022. "Inequality, income dynamics, and worker transitions: The case of Mexico," Quantitative Economics, Econometric Society, vol. 13(4), pages 1669-1705, November.
    6. Cazzuffi, Chiara & Pereira-López, Mariana & Rosales, Irving & Soloaga, Isidro, 2023. "Monopsony Power and Labor Income Inequality in Mexico," IDB Publications (Working Papers) 13044, Inter-American Development Bank.
    7. Sofía Fernández Guerrico, 2023. "Trade Shocks, Population Growth, and Migration," ULB Institutional Repository 2013/357236, ULB -- Universite Libre de Bruxelles.
    8. Zhuhua Jiang & Chizheng Miao & Jose Arreola Hernandez & Seong-Min Yoon, 2022. "Effect of Increasing Import Competition from China on the Local Labor Market: Evidence from Sweden," Sustainability, MDPI, vol. 14(5), pages 1-18, February.

    More about this item

    Keywords

    Import competition; local labor markets; employment; China; Mexico;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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