US workers outside manufacturing see earnings gains after China trade shock
A Federal Reserve paper finds that US workers outside manufacturing experienced relative earnings increases after trade liberalization with China. These gains accumulated over time, driven by beneficial upstream exposure.
Upstream competition benefits non-manufacturing
The paper finds that US workers outside manufacturing exhibit relative earnings increases after trade liberalization with China.
These gains cumulated over time as the beneficial effect of a worker’s upstream exposure—increased competition from China in input markets—more than offset detrimental impacts from their own and downstream (customer) exposures.
Tenure and sector shape gains
The study notes that these relative gains were smaller for non-manufacturing workers with less ex ante firm tenure and lower initial earnings.
Furthermore, such gains were absent among manufacturing workers due to a lack of upstream benefits and stronger downstream losses.