Effects of Chinese Import Competition on Self-employed Business Owners in the U.S.

Abstract

Exploiting variation in exposure to Chinese import growth across U.S. local markets, I investigate the effects of import competition on self-employment between 1990 and 2014. I find Chinese import competition had negative effects on self-employment during the 1990s. However, the negative effects disappear after 2000. Indeed, Chinese import growth did not have any significant impact on self-employment in manufacturing, but had positive effects on self-employment in non-manufacturing sectors, mostly driven by incorporated self-employed individuals. I also find that the impact varies substantially across different groups characterized by gender, age, and education.