Imports into America from China in the 1990s and 2000s hurt partly because they hit places that were already struggling
of Des Moines, Iowa, are no strangers to economic upheaval. When a wave of Japanese imports arrived in America in the 1980s, their city was one of the places most vulnerable to the new competition. In 1974, 4,500 of them worked at making farm machinery and equipment. As many again made tyres and inner tubes. By 1990 only a little over half of those jobs were left. Yet in the intervening 16 years thousands of new jobs had sprouted, in life insurance, building materials and the restaurant trade.
Why did competition from China hurt so much more than that from Japan a generation before? In another new study Katherine Eriksson, Katheryn Russ and Minfei Xu, of the University of California, Davis, and Jay Shambaugh, of George Washington University, sift the evidence and conclude that vulnerability to trade shocks depends on when and where they strike.
Manufacturing employment blossomed at the beginning of the 20th century in places where people tended to be better educated and which produced more patents per person than the average. But as the decades passed and manufacturing employment spread, the correlation with patenting and education weakened.
The authors argue that the China shock hurt so much because it whacked people who were already struggling. Areas with fewer college-educated workers suffered bigger dents in labour-force participation. And workers in places where industries were already moving out proved the least nimble. Employment fell by more in places where jobs in exposed industries had declined between 1960 and 1980.Other studies have delved into why the China shock hurt so much.
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