Unintended Consequences: Who are Import-Competing Displaced Workers and How Have They Been Affected by the China Shock

Abstract

As international trade has expanded, various studies have focused on the gains and losses that it produces. While many of them observe the workforce as a whole, this empirical study focuses on the individuals that are displaced from their work due to increasing import competition through examining their demographic characteristics and labor market outcomes. Specifically, it addresses the impact that the China shock has had on import-competing workers. Using data from the Displaced Worker Supplement, this study employs regressions that analyze the relationship between a worker’s import-competing status and their likelihood of reemployment, their change in earnings and their likelihood of displacement. Ultimately, the findings suggest that import-competing workers face greater earnings losses (upon displacement) and experience a higher likelihood of displacement than their counterparts in non-tradable industries.