Calculating the China Shock to US Employment: An Input-Output Labor-Accounting Approach

Abstract

This study uses input-output labor-accounting to estimate the impact of rising imports from China on US employment. Our counterfactual analysis incorporates offsets from substitution for imports from other countries, increased US exports to China and other countries, and job gains in downstream sectors using imported inputs. We find that from 2000 to 2016, the China shock displaced 716,000 direct and indirect jobs in manufacturing, 14.3 percent of the period’s decline, but created 39,000 jobs in non-manufacturing. The net loss of 676,000 jobs was far below widely cited estimates of about 2 million divided evenly between manufacturing and non-manufacturing.