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Title:The rise of the East and the Far East: German labor markets and trade integration PDF Logo
Authors:Dauth, Wolfgang
Findeisen, Sebastian
Suedekum, Jens
Issue Date:2012
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6685
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.
Subjects:international trade
import competition
export opportunities
local labor markets
employment
China
Eastern Europe
Germany
JEL:F16
J31
R11
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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