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China Syndrome? Labour market effects of a greater trade openness in United States
Fabrizio Antenucci

Last modified: 2018-06-20

Abstract


According to the recent economic literature, international trade seems to have a significant influence on the US labour market, especially due to the import penetration of Chinese products. In particular, Chinese import would mainly have caused a strong employment contraction as well as a negative impact on the cumulated earnings of workers employed in the sectors most exposed to this competition (China Syndrome). Although it can be supposed that, in recent decades, international trade has had a negative impact on the labour market in the United States, and more generally in most developed countries, in this paper it is claimed that, from a theoretical point of view, import penetration does not represent an appropriate variable to detect the influence of international trade on the labour market. The aim of this paper is to offer an alternative analysis tool, such as the Trade Openness Index, which could exceed the limits of the Factor Content of Trade and the Stolper-Samuelson theorem, utilized in traditional analysis, and provide a more comprehensive explanation of the impact of international trade on the labour market than import penetration does. At the same time the Trade Openness Index can offer an alternative interpretation of how international trade can affect the labour market. In particular, a greater trade openness could result in a bargaining power weakening of those categories most exposed to international competition.


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