Competing with the Dragon: Employment and Wage Effects of Chinese Trade Competition in 17 Sectors Across 18 OECD Countries

Date: 01 November 2014

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.

Stefan Thewissen Olaf Van Vliet

Employment, Equity and Growth

Competing with the Dragon: Employment and Wage Effects of Chinese Trade Competition in 17 Sectors Across 18 OECD Countries


Type: working-paper

Thewissen, S. and Van Vliet, O. (2014) 'Competing with the dragon: Employment and wage effects of Chinese trade competition in 17 sectors across 18 OECD countries,' LIS Working Paper Series no. 623


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