Scientific paper

Identifying Chinese supply shocks: Effects on trade labor markets

Andreas M. Fischer, Philipp Herkenhoff, Philipp Sauré

2023

Published in the Review of International Economics

An influential literature estimates the impact of trade on labor markets with shift-share instrumental variable designs under the assumption that common demand shocks in advanced economies are negligible. This article documents empirical patterns, which suggest that such common demand shocks are prevalent. It then proposes a strategy that directly identifies country-specific export supply shocks. Finally, it uses these supply shocks in reduced-form regression, which suggest contractions of manufacturing employment that are larger than those in the seminal contribution by Autor et al. (American Economic Review, 2013, 103, 2121–2168).

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