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The rise of the East and the Far East: German labor markets and trade integration


Dauth, Wolfgang; Findeisen, Sebastian; Suedekum, Jens (2013). The rise of the East and the Far East: German labor markets and trade integration. UBS Center Working Paper Series 3, University of Zurich : UBS International Center of Economics in Society.

Abstract

We analyze the effects of the unprecedented rise in trade between Germany and "the East" – China and Eastern Europe – in the period 1988 – 2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of "the East" in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships.

Abstract

We analyze the effects of the unprecedented rise in trade between Germany and "the East" – China and Eastern Europe – in the period 1988 – 2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of "the East" in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > UBS International Center of Economics in Society
03 Faculty of Economics > Department of Economics
Working Paper Series > UBS Center Working Paper Series
Dewey Decimal Classification:330 Economics
JEL Classification:F16, J31, R11
Uncontrolled Keywords:International trade, import competition, export opportunities, local labor markets, employment, China, Eastern Europe, Germany
Language:English
Date:August 2013
Deposited On:10 Sep 2013 15:21
Last Modified:21 Nov 2017 16:50
Series Name:UBS Center Working Paper Series
Number of Pages:34
ISSN:2296-2751
Official URL:http://www.ubscenter.uzh.ch/assets/workingpapers/WP3_The_Rise_of_the_East_and_the_Far_East.pdf
Related URLs:http://www.ubscenter.uzh.ch/en/publications/workingpapers

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