The China Syndrome: Local Labor Market Effects of Import Competition in the United States
As U.S. imports from China have increased over the past two decades, scholars have studied and debated their precise effects on American workers. Because local economies often have their own dynamics and distinct mix of companies, such imports may have very different outcomes in various regions of the country.
A 2011 study from MIT, the UC San Diego and Spain’s Center for Monetary and Financial Studies, “The China Syndrome: Local Labor Market Effects of Import Competition in the United States” (PDF), assesses varying degrees of exposure of U.S. markets to Chinese imports, and the impact on employment and wages in manufacturing and other sectors. The study, for the National Bureau of Economic Research, looks at outcomes among more than 700 American regions from 1990 to 2007.
The findings include:
- Rising imports of Chinese goods have had significant negative effects on U.S. labor markets exposed to increased import competition. These include decreased employment and household incomes and increased government benefits program enrollments and transfer payments.
- Regions with higher exposure to imports suffer declines in manufacturing employment by 0.65 percentage points more than regions with lower import exposure.
- Exposure to Chinese imports explains 16% of the declines in U.S. manufacturing employment between 1991 and 2000 and 28% of the declines from 2000 to 2007. For the full period (1991 to 2007), Chinese import competitiveness explains 23% of the declines in U.S. manufacturing employment.
- Increases in import exposure reduce wages for the non-manufacturing sector through lower demand for non-manufacturing goods, and through increased supply of labor from workers who lost their manufacturing sector jobs. Wages in the manufacturing sector did not record declines despite reduction in employment in the sector.
- Job losses induced by import shocks were concentrated among young workers in the manufacturing sector, and among older workers in non-manufacturing sectors.
- Adults without college degrees suffered a higher reduction in employment compared to adults with a college degree.
- Among those who lose jobs because of increases in import exposure, 10% seek federal disability insurance benefits. For a $1,000 increase in import exposure, in-kind medical benefits rose by $18 per capita, Social Security disability by $8, and federal and other income assistance by $11. These did not offset the decline in average annual household income of $549 per working age adult for a $1,000 increase in import exposure.
The authors conclude that reductions in employment and wage levels driven by Chinese imports “lead to a steep drop in the average earnings of households.”
A 2011 World Bank study, “Estimating the Impact of Trade and Offshoring on American Workers,” provides additional data and perspectives on related globalization issues. The Office of the U.S. Trade Representative also presents a variety of contemporary data on the U.S.-China economic relationship.
Tags: China, trade, employment
Note to instructor: The suggested lessons are designed for flexibility. The goal is to have students understand how to convey the study’s findings accurately and to consider techniques for making the subject matter broadly accessible. In addition, it is well worth discussing how the study was put together and the intellectual context from which it comes. There is also a related news article in the study analysis section.
Newswriting and digital reporting assignments
- Write a lead, headline or nut graph based on the study.
- Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
- Compose two Twitter messages of 140 characters or fewer accurately conveying the study’s findings to a general audience. Make sure to use appropriate hashtags.
- Choose several key quotations from the study and show how they would be set up and used in a brief blog post.
- Map out the structure for a 60-second video segment about the study. What combination of study findings and visual aids could be used?
- Find pictures and graphics that might run with a story about the study. If appropriate, also find two related videos to embed in an online posting. Be sure to evaluate the credibility and appropriateness of any materials you would aggregate and repurpose.
Class discussion questions
- What is the study’s most important finding?
- Would members of the public intuitively understand the study’s findings? If not, what would be the most effective way to relate them?
- What kinds of knowledgeable sources you would interview to report the study in context?
- How could the study be “localized” and shown to have community implications?
- How might the study be explained through the stories of representative individuals? What kinds of people might a reporter feature to make such a story about the study come alive?
- What sorts of stories might be generated out of secondary information or ideas discussed in the study?
- What are the study's key technical term(s)? Which ones need to be put into language a lay audience can understand?
- Do the study’s authors put the research into context and show how they are advancing the state of knowledge about the subject? If so, what did the previous research indicate?
- What is the study’s research method? If there are statistical results, how did the scholars arrive at them?
- Evaluate the study's limitations. (For example, are there weaknesses in the study's data or research design?)
- How could the findings be misreported or misinterpreted by a reporter? In other words, what are the difficulties in conveying the data accurately? Give an example of a faulty headline or story lead.
Read the issue-related New York Times article titled "Come on, China, Buy Our Stuff."
- What key insights from the study and article should reporters be aware of as they cover U.S.-China economic issues?