The effect of developing countries' competition on regional labour markets in Portugal

Portuguese trade with developing countries rose 564% in the last 20 years and China became in 2014 the 8th most important importer among all trade partners. At the same time, Portugal witnessed its manufacturing employment decreasing 34%. Using a sample of persons employed in enterprises between 2004 and 2012, I show whether regions more exposed to Chinese import competition face a larger decline in manufacturing employment. My results show that an increase of 1000 EUR in imports per worker throughout the period considered causes a decrease in the share of manufacturing employment in the working age population by approximately 0.12 percentage points or a decline of 0.431 log points. Moreover, my estimations did not show a clear conclusion about the impact of import competition on non-manufacturing employment and on whether people move to other regions in response to a trade shock, but they indicate a rise in unemployment.