U.S.-China Trade Inequity Has Direct Impact on Workers

By Monitor, Christian Science | Tribune-Review/Pittsburgh Tribune-Review, May 12, 2011 | Go to article overview

U.S.-China Trade Inequity Has Direct Impact on Workers


Monitor, Christian Science, Tribune-Review/Pittsburgh Tribune-Review


As top economic officials from the United States and China meet in Washington this week, old concerns still linger: Are China's trade policies stealing jobs from American workers? Should the United States take a tougher, more retaliatory line in its own trade policies?

It's a debate that raged even under President Clinton in the 1990s, when Chinese exports to the United States were much smaller and the U.S. economy was much healthier.

In two-day bilateral talks this week, Treasury Secretary Tim Geithner pressed China to do more to protect intellectual property rights for global companies like Microsoft, and to allow its currency to move in foreign-exchange markets with greater flexibility. Some lawmakers in Congress have proposed a stronger- armed approach, slapping on trade penalties if Beijing fails to act along those lines.

The dialogue -- and the threats of pressure from Congress -- come as recent research by economists may be bringing the ripple effects of trade into clearer focus. The upshot of the research isn't that trade with China is harming the U.S. economy, but it does suggest that the negative effects on many U.S. workers have been considerable.

In a study published earlier this year, three academic economists examined the effects of rising imports from China on the U.S. job market since 1990. They sought what could be called the "China effect" by looking at local labor markets, including some that were heavily affected by Chinese imports and some that were less affected.

What they found were sizable negative effects in the form of lost jobs, lower wages, and lower labor-force participation. Although the job losses were concentrated in factories -- accounting for one- third of the decline in manufacturing jobs between 1990 and 2007 -- the effects on wages spread throughout local economies, concluded researchers David Autor of the Massachusetts Institute of Technology, David Dorn of the Center for Monetary and Financial Studies in Madrid, and Gordon Hanson of the University of California in San Diego.

"There is nothing in our results to show that U.S. trade with China overall is negative" in its impacts, Hanson says. For one thing, their study makes no effort to account for positive impacts on the economy from US exports to China.

But Hanson says the magnitude of the negative impacts, as found in their research, surprised him despite his years of studying the economics of trade. …

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