To Find Relative Earnings Gains After the China Shock, Look Outside Manufacturing and Upstream

We use employer-employee data to follow US workers' long-run employment flows and earnings after trade liberalization with China. We find that manufacturing workers in more exposed counties flow disproportionately into low-skill services such as retail and temp agencies, and are more likely to exhibit nominal wage declines after seven years. Formal difference-in-differences analysis reveals that exposure to this shock operates predominantly through workers' local labor market versus industry, that greater upstream exposure via suppliers can offset the adverse impact of own and downstream exposure, and that workers initially employed outside manufacturing generally exhibit relative earnings growth as a result of the liberalization.

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