David production wage7/27/2023 ![]() Our work looks at whether the downward pressure on wages from increased competition with China is shared across the income distribution or whether the impacts on high- or low-wage workers are particularly acute. Most available estimates of the impact of free trade on wages focus on the average effect - on average, trade helps the overall economy but hurts those exposed to the international competition.īut we wanted to dig deeper to understand precisely who was affected by Chinese imports. ![]() Now let’s return to wage inequality and trade with China. Is the policy only helping the high- scoring students get even better grades on their tests? Or is it also lifting the test scores of the lower-performing students? Important results - and a good deal of nuance - are often misinterpreted or missed altogether by focusing only on averages. If you’re only looking at the averages, you’ll never know where the improvement is really coming from. Suppose a change in education policy leads to higher average student test scores. Unearthing effects beyond just averages reveals who wins or loses the most in a given situation.Ĭonsider an example from a different context: education. The key contribution of our research is looking beyond averages. This is consistent with the intense voter response to globalization: People in the most difficult economic situations to begin with were walloped by China. Our recent work (Chetverikov et al., 2016) shows that trade with China hit low-wage workers twice as hard as it did the average American worker. Not only were some areas hit harder than others but some workers were hit harder within each area. metropolitan areas specializing in manufacturing - areas that faced particularly strong competition from Chinese imports - experienced the largest drops in average wages and the most political upheaval, with incumbent legislators from both parties being voted out of office. Influential academic work (Autor et al., 2013, 2016) measures some of the costs of rises in Chinese imports. Heated debates about the costs and benefits of U.S.-China trade relations have been front and center in the political discourse in recent years, especially as the two countries negotiated toward this month’s deal. The new findings help explain why areas that faced particularly strong competition from Chinese imports saw the most political upheaval, with incumbents being voted out of office.high-wage earners was most drastic for women, especially those without a college education. The unequal effect of trade on low- vs.Trade with China hit low-wage workers twice as hard as it did the average American worker.Stanford King Center on Global Development.Stanford Environmental and Energy Policy Analysis Center (SEEPAC).Stanford Center on China's Economy and Institutions (SCCEI).California Policy Research Initiative (CAPRI).
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