The Rise of the East and the Far East: German Labor Markets and Trade Integration

By W. Dauth, S. Findeisen, Jens Suedekum. Social Science Research Network, 2014

568 citations recorded by the source corpus.

We analyze the effects of the unprecedented rise in trade between Germany and “the East” (China and Eastern Europe) in the period 1988–2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of the East in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 442,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. This is almost exclusively driven by the rise of Eastern Europe, not by China. We also conduct an analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/9e806f979e5a351cc6ee71d13a9a4e62f9161461

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Citations in the corpus

Racing with or Against the Machine? Evidence from Europe (2016, unknown): “…to the WTO, has had an economically sizable impact on labor demand in U.S. regions (Autor et al. 2013; Caliendo et al. 2015) and on German regions (Dauth et al. 2014) but that these effects are not strongly correlated with the labor demand effects of RRTC at the regional or occupational level, or…”
US exports and employment (2019, unknown): “Our second instrument for US exports, ∆EP PRE st , is constructed as the predicted US exports due to changes in tariffs and multilateral import demand as specified by equation (9).”
The Trade Origins of Economic Nationalism: Import Competition and Voting Behavior in Western Europe (2018, methodology): “shown that import competition implies significant adjustment costs in terms of job displacement and reduced earnings (Acemoglu et al. 2016; Autor et al. 2013, 2016; Dauth et al. 2014), and poorer physical and mental health for exposed workers (Colantone et al.”
Foreign Competition and Domestic Innovation: Evidence from US Patents (2020, unknown): “Dauth et al. (2014) estimate that the labor market effects of China trade for Germany, for instance, have been much less severe.”
German Robots - The Impact of Industrial Robots on Workers (2017, methodology): “29This setup follows Dauth et al. (2017) who show that changing industry compositions of employment in Germany are driven only to a lesser extent by workers who smoothly change jobs across industries.”
The Impact of Chinese Import Competition on the Local Structure of Employment and Wages: Evidence from France (2017, unknown): “, 2013) or German data (Dauth et al., 2014) which find no evidence of wage effect in the manufacturing sector.”