Should-Read: Robert Feenstra, Hong Ma, Akira Sasahara, and Yuan Xu: Reconsidering the ‘China shock’ in trade

Should-Read: On the one hand, of course, obviously yes: looking at just the import surge from China without looking at exports or domestic investment financed paints a very false picture. Trade balances and the factor content of what is exported and domestically financed is not that much different from the factor content of what is imported. The key crux to globalization backlash, of course, is that with international imports one can blame brown people in Mexico or yellow people in China for the loss of midwestern jobs and so build a national political movement. One cannot do the same by blaming textile workers in the Carolinas for the decline of Lowell and Fall River: Robert Feenstra, Hong Ma, Akira Sasahara, and Yuan Xu: Reconsidering the ‘China shock’ in trade: “While previous studies focus on the job-reducing effect of the surging imports from China or other low-wage countries on US employment…

…the job-creating effect of exports has receive much less attention. This column employs two approaches–an instrumental variable regression analysis and a global input-output approach–to argue that the negative effects of import competition on US employment are largely balanced out once the country’s job-creating export expansion is taken into account…