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The rapid growth of goods imports from China in the 2000s caused substantial manufacturing job losses in US regions that were specialized in import-competing industries. A new study finds that the elevated geographic mobility of foreign-born workers contributed little to mitigate this regionally unbalanced impact of the ‘China shock’.
Foreign-born adults exhibit high geographic mobility than natives, and their location choices are more likely to be responsive to local economic conditions. Immigrants therefore play a potentially important role in the adjustment of a national economy to localized shocks. When employment prospects worsen in a region, immigrants move to other locations with better job prospects, thus rebalancing labor market outcomes across space.
A new paper by David Dorn, UBS Foundation Professor of Globalization and Labor Markets at our department, David Autor from MIT, and Gordon Hanson from Harvard, explores the mobility responses of foreign-born and native adults in response to the Chinese import competition shock in the US during the 2000s.
A rapid surge of goods imports from China from 2000 to 2012 caused a substantial concurrent decline in employment in US regions whose local industries faced strong Chinese competition. While the growth of native population barely reacted to these adverse local economic outcomes, the foreign-born population declined significantly. These results are consistent with the notion that immigrants are more response to economic conditions than natives.
Examining the role of immigration in trade shock adjustments
Although foreign-born population headcounts fell by a larger proportion than those of the native-born in trade-exposed regions, the contribution of immigration to labor market adjustment in the study period was small. Because most US immigrants arrived in the country after manufacturing regions were already mature, few took jobs in industries that later saw import surges. Regions with high trade exposure thus had lower foreign-born populations than regions facing little trade competition. The concentration of Latin American and Caribbean immigrants in coastal and border regions, and away from inland manufacturing hubs, limited their ability to facilitate local labor markets adjustment to trade-induced manufacturing job loss.
Immigration may do more to aid adjustment to temporary cyclical shocks than to secular decline. In the former case, job loss follows recent hiring booms that likely attracted foreign-born workers, while in the latter case, declining regions may lack a sizable population of spatially mobile immigrants that could mitigate the local impacts of adverse economic shocks.
