International Finance Discussion Papers (IFDP)
January 2026
To Find Relative Earnings Gains After the China Shock, Look Upstream and Outside Manufacturing
Justin R. Pierce, Peter K. Schott, and Cristina J. Tello-Trillo
Abstract:
We find that US workers outside manufacturing exhibit relative earnings increases after US trade liberalization with China. These relative gains cumulate over time as the beneficial effect of a worker’s upstream exposure—increased competition from China in input markets—more than offsets the detrimental impact of her own and downstream (customer) exposures. These relative gains are smaller for non-manufacturing workers with less ex ante firm tenure and lower initial earnings, and are absent among manufacturing workers due to a lack of upstream gains and stronger downstream losses.
Keywords: Trade, Worker Earnings, Uncertainty
DOI: https://doi.org/10.17016/IFDP.2026.1431
PDF: Full Paper
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