This paper links the sharp drop in US manufacturing employment after 2000 to a change in US trade policy that eliminated potential tariff increases on Chinese imports. Industries more exposed to the change experience greater employment loss, increased imports from China, and higher entry by US importers and foreign-owned Chinese exporters. At the plant level, shifts toward less labor-intensive production and exposure to the policy via input-output linkages also contribute to the decline in employment. Results are robust to other potential explanations of employment loss, and there is no similar reaction in the European Union, where policy did not change. (JEL D72, E24, F13, F16, L24, L60, P33)

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The Surprisingly Swift Decline of U.S. Manufacturing Employment

China has defied the declining trend in domestic content in exports in many countries. This paper studies China’s rising domestic content in exports using firm- and customs transaction-level data. The approach embraces firm heterogeneity and hence reduces aggregation bias. The study finds that the substitution of domestic for imported materials by individual processing exporters caused China’s domestic content in exports to increase from 65 to 70 percent in 2000–2007. Such substitution was induced by the country’s trade and investment liberalization, which deepened its engagement in global value chains and led to a greater variety of domestic materials becoming available at lower prices.

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Domestic Value Added in Exports: Theory and Firm Evidence from China

Environmental regulation and firm exports: Evidence from the eleventh Five-Year Plan in China

In the late 1990s, China’s industrial sector was dominated by state-owned firms. We document how this changed after 1998. More than 80 percent of the state-owned firms in 1998 were shut down or privatized by 2007. Among firms we classify as state-controlled in 2007, many were restructured and registered as private firms with a controlling share held by a state-owned conglomerate or were new firms established after 1998. In 2007, almost half of the state-controlled firms were registered as private firms, and about 40 percent were new firms established after 1998. The privatization and convergence in labor productivity decelerated after 2007, but the establishment of new state-owned firms continued at roughly the same rate. When we interpret these facts through the lens of an equilibrium model of heterogeneous firms, we find that the transformation of firms that remained under state control and the creation of new state-controlled firms together account for 21 percent of China’s growth from 1998 to 2007 and 18 percent of its growth from 2007 to 2012. However, the exit and privatization of state-owned firms had a negligible effect on aggregate growth.

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Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China

This paper estimates the long-term effects of the global recession of 2008-2009 on output in 23 countries I measure these effects by comparing current estimates of potential output from the OECD and IMF to the path that potential was following in 2007, according to estimates at the time The losses in potential output range from almost nothing in Australia and Switzerland to more than 30% in Greece, Hungary, and Ireland; the average loss, weighted by economy size, is 84% Most countries have experienced strong hysteresis effects: shortfalls of actual output from pre-recession trends have reduced potential output almost one-for-one In the hardest-hit economies, the current growth rate of potential is depressed, implying that the level of lost potential is growing over time

Long-Term Damage from the Great Recession in OECD Countries

王璐航系厦门大学经济学科2012年新引进的助理教授，博士毕业于加拿大多伦多大学经济系，主要研究兴趣为中国经济、国际贸易与应用微观经济学。其论文曾在比较经济学国际重要期刊Journal of Comparative Economics上发表。本次王璐航发表在《美国经济评论》的论文利用中国加入WTO带来的关税变化研究中国最终产品以及中间投入品的市场开放对于制造业绩效的影响。研究发现最终产品关税的降低一方面压缩了大企业的价格加成，另一方面推动了行业生产效率的提高。与其他国家的经验不同，中国行业效率提升的主要原因是竞争机制的强化进而筛选出了更好的新企业进入。伴随着中间品关税的降低，中国的中间品进口增长有限，但是中间品价格大幅下降。得益于由此带来的成本降低，企业提高了加成率。中间品市场的变化也对新进入企业的生产效率有正的贡献。该文也是厦大经济学科“海归”教师在国际顶级期刊发表研究中国经济问题的众多学术论文的一个典型代表。

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WTO Accession and Performance of Chinese Manufacturing Firms

Chinaâ€™s economy grew by an impressive 10 percent per year over four decades Productivity improvements within sectors and gains from resource reallocation between sectors and ownership groups drove that expansion However, productivity growth has declined markedly in recent years This paper extends previous macro and firm-level studies to show that domestic factors and policies contributed to the slowdown The analysis finds that limited market entry and exit and lack of resource allocation to more productive firms were associated with slower manufacturing total factor productivity growth Earlier reforms led to state-owned enterprises catching up to private sector productivity levels in manufacturing, but convergence stalled after 2007 Furthermore, the allocation of a larger share of credit and investment to infrastructure and housing led to lower returns to capital, a rapid buildup in debt, and higher risks to growth Chinaâ€™s growth potential remains high, but its long-term growth prospects depend on reversing the recent decline in total factor productivity growth

China's Productivity Slowdown and Future Growth Potential

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WTO Accession and Performance of Chinese Manufacturing Firms: Corrigendum

China’s policy-makers argued that WTO accession and the accompanying trade liberalization would have a beneficial impact on the domestic economy. China’s import tariffs differed tremendously across industry in the earlier years, but converged to an almost uniform low level after WTO entry. We exploit sectoral variation in the extent of tariff reduction to identify the impact of increased import competition on firm performance and its contribution to the significant productivity growth over the 1995–2007 period. We find evidence of strong downward pressure on prices and mark-ups, but limited evidence that imports took away market share from domestic firms. Furthermore, much of the effects on sectoral productivity come from changes at the extensive margin. Sectors that liberalized most tend to attract especially productive entrants, private firms in particular, which can be rationalized by an increase in the minimum productivity threshold needed to survive in these sectors.

Luhang Wang

Papers

WTO Accession and Performance of Chinese Manufacturing Firms

China's Productivity Slowdown and Future Growth Potential

WTO Accession and Performance of Chinese Manufacturing Firms: Corrigendum

WTO Accession and Performance of Chinese Manufacturing Firms

Replication data for: WTO Accession and Performance of Chinese Manufacturing Firms