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date: 02 November 2024

International Trade and Labor Marketslocked

International Trade and Labor Marketslocked

  • Greg WrightGreg WrightEconomics, University of California, Merced

Summary

China's entry into the World Trade Organization in 2001 rapidly integrated tens of millions of low-skilled workers into the global labor market, establishing a new center for low-wage goods manufacturing and offering a distinct opportunity to test models of international trade. Recent literature has found that the impact of this “China shock” has been uneven across regions within countries. Theoretically, region-specific labor market outcomes emerge only when there are internal barriers to factor mobility within a country, suggesting these barriers were underestimated prior to the extensive empirical research sparked by the China shock. Since workers with limited formal education and those outside the 25-39 age range are considerably less mobile than others, these workers have experienced more negative outcomes due to exposure to import competition in recent decades. Most notably, these workers have suffered the bulk of workforce displacement and attendant social ills resulting from China's rise as a global economic power.

Subjects

  • International Economics

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