Import Competition and Internal Migration

Abstract

We examine the U.S. internal migration response to increased import competition following the granting of Permanent Normal Trade Relations to China in 2001. Using a range of data sets, we find that local labor markets most exposed to the policy change experienced a reduction in population growth over the following decade. The result is more pronounced among young individuals and men. Examining annual data on migration, we find that approximately 30% of the response takes place within one year of the shock, while the majority of the remaining effect occurs at a lag of 7 to 10 years. Population adjustments like those we find should influence the interpretation of evidence in the large and growing literature on the effects of import competition on local labor markets. Selective migration away from trade-shocked areas (consistent with our findings) alters local demographics so that measured location-specific changes before and after shocks can be explained by both compositional changes and direct effects of import competition on local residents.