A recent analysis that everyone in the development community talks about finds that exposure to Chinese import competition affects local labor markets in the US along numerous margins beyond its impact on manufacturing employment. Growing Chinese imports reduces manufacturing employment in exposed local labor markets. More surprisingly, it also triggers a decline in wages that is primarily observed outside of the manufacturing sector. Reductions in both employment and wage levels lead to a steep drop in the average earnings of households.
Overall, the study suggests that the increase in U.S. imports of Chinese goods during the past two decades has had a large impact on employment and household incomes, benefits program enrollments, and transfer payments in local labor markets exposed to increased import competition. These effects extend outside manufacturing and imply changes in worker and household welfare