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Lasting Effects of an Import Shock: Channels of Adjustment

Knutsson, Polina LU (2020) In Working Papers
Abstract
This paper exploits a quasi-natural experiment to study the channels of labor market adjustment to an import shock. Using matched employer-employee data from Sweden, I study workers' adjustment after the removal of quotas set out by the Multi-Fiber Arrangement for Chinese producers upon China's entry into the WTO. I find evidence of substantial losses in terms of earnings and employment. Sectoral mobility mitigates a portion of these losses, but gives rise to substantial adjustment frictions. The largest losses accrue to workers with skills specific to the exposed industry. Some losses are recovered through mobility across labor markets, but only workers in high-skill occupations benefit from this channel. I also show that skill... (More)
This paper exploits a quasi-natural experiment to study the channels of labor market adjustment to an import shock. Using matched employer-employee data from Sweden, I study workers' adjustment after the removal of quotas set out by the Multi-Fiber Arrangement for Chinese producers upon China's entry into the WTO. I find evidence of substantial losses in terms of earnings and employment. Sectoral mobility mitigates a portion of these losses, but gives rise to substantial adjustment frictions. The largest losses accrue to workers with skills specific to the exposed industry. Some losses are recovered through mobility across labor markets, but only workers in high-skill occupations benefit from this channel. I also show that skill specificity of the local labor market is an important determinant of adjustment and provide evidence of skill upgrading in response to the import shock. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
Import competition, worker mobility, human capital, F14, F16, J24, J31
in
Working Papers
issue
2020:3
pages
57 pages
language
English
LU publication?
yes
id
f6140c8d-0587-4e9b-bdfc-3a59480331bb
alternative location
https://swopec.hhs.se/lunewp/abs/lunewp2020_003.htm
date added to LUP
2020-04-07 11:36:58
date last changed
2020-04-07 15:40:24
@misc{f6140c8d-0587-4e9b-bdfc-3a59480331bb,
  abstract     = {{This paper exploits a quasi-natural experiment to study the channels of labor market adjustment to an import shock. Using matched employer-employee data from Sweden, I study workers' adjustment after the removal of quotas set out by the Multi-Fiber Arrangement for Chinese producers upon China's entry into the WTO. I find evidence of substantial losses in terms of earnings and employment. Sectoral mobility mitigates a portion of these losses, but gives rise to substantial adjustment frictions. The largest losses accrue to workers with skills specific to the exposed industry. Some losses are recovered through mobility across labor markets, but only workers in high-skill occupations benefit from this channel. I also show that skill specificity of the local labor market is an important determinant of adjustment and provide evidence of skill upgrading in response to the import shock.}},
  author       = {{Knutsson, Polina}},
  keywords     = {{Import competition; worker mobility; human capital; F14; F16; J24; J31}},
  language     = {{eng}},
  month        = {{03}},
  note         = {{Working Paper}},
  number       = {{2020:3}},
  series       = {{Working Papers}},
  title        = {{Lasting Effects of an Import Shock: Channels of Adjustment}},
  url          = {{https://swopec.hhs.se/lunewp/abs/lunewp2020_003.htm}},
  year         = {{2020}},
}