China's impact on regional employment: Propagation through input–output linkages and co-location patterns

Shuhei Kainuma*, Yukiko U. Saito

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

How do imports from China affect local labour markets in Japan? We examine this question using commuting zones as regional units and analysing shock propagation through supply chains and co-location patterns. Applying the method proposed by Autor et al. (American Economic Review, 103, 2121, 2013) and Acemoglu, Autor et al. (Journal of Labor Economics, 34, S141, 2016), we examine the impact of import shocks on regional manufacturing employment using input–output tables which allows us to investigate the propagation of shocks to both upstream and downstream industries and to relate the regional impact to industry co-location patterns. We find that the negative direct effect on local employment is underestimated in previous studies that do not consider the regional propagation of the shock through supply chains, especially the positive shock to downstream industries. Downstream industries in Japan, for example, significantly benefit from imports from China as they lower input prices and increase employment. In contrast to downstream industries, we find no significant impact on upstream industries. Our results imply that the direct negative effect on local labour markets is somewhat mitigated by effects on downstream industries within the same region.

Original languageEnglish
JournalWorld Economy
DOIs
Publication statusAccepted/In press - 2022

Keywords

  • import competition
  • industry co-location
  • input–output linkages
  • international trade
  • local labour markets

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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