The Rise of China and Changing Global Production Structures

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IZA Seminar

Place: Zoom

Date: 26.10.2021, 14:00 - 15:15

   

Presentation by 

Christian Dustmann (University College London)
   

Abstract:

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https://us02web.zoom.us/j/87487213161

Meeting ID: 874 8721 3161






This paper analyzes and contrasts the impact of greater integration with “The East” (China plus former Eastern Bloc countries) on the US and Germany, using a novel decomposition of the overall effect on output and the labor market into direct effects and indirect effects through induced changes ‘upstream’ from focal industrie, drawing additional distinction between international and domestic effects. We show that while for the US the direct effects of trade decrease production, particularly in the manufacturing sector, these are more than offset by ‘upstream’ effects. For Germany, both the direct and indirect effects induced increases in output, with manufacturing workers seeing significant relative gains, but relative losses in the US. Differences in labor demands by industry lead to heterogeneities in labor demands by types of worker, with lower skilled male manufacturing workers disproportionately negatively affected in the US, while similar workers actually saw gains, in both absolute and relative terms, in Germany. Service workers saw absolute gains in labor demand in both the US and in Germany. Distinguishing between domestic and international upstream effects, we show that these are substantial for both countries, particularly in manufacturing, with domestic upstream effects especially important for service industries.

   
   
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