Abstract
This paper examines the hypothesis that manufacturing industries in Japan that have been exposed to import competition from the People’s Republic of China (PRC) experience greater skill upgrading (increased demand for skilled workers). Using an industry panel dataset over the period 1980–2010, we exploit variations of worker skill categories by occupation, paired with detailed information and communication technology investment data in the employment share regression. We find that while the PRC’s comparative advantages in exports have shifted from labor-intensive to more capital-intensive products, this has not resulted in substituting skilled workers in Japanese manufacturing. Rather, it has had the profound positive effect of raising overall demand for skilled workers. Most of the competition effects were felt among production workers, leaving middle-skilled workers largely unaffected.
Highlights
The well-documented historic rise of the People’s Republic of China (PRC) as a trading powerhouse has exerted competitive shocks on the world economy and raised serious concerns among policy circles in industrial economies
Using rich information extracted from the Japan Industrial Productivity (JIP) database, we examine the PRC import competition industry variation and its effects on skill demand, while controlling for a proxy for skilled-biased technological changes (SBTC) and other confounding factors
The main finding is that PRC import competition has the statistically significant positive effect on change in industry skill upgrading, raising the skill demand of Technical workers: a 10% increase in CHN would lead to a 6.2 percentage point increase in the employment share of Tech workers
Summary
The well-documented historic rise of the People’s Republic of China (PRC) as a trading powerhouse has exerted competitive shocks on the world economy and raised serious concerns among policy circles in industrial economies These concerns have been directed toward the PRC’s import competition as it pertains to the labor market, especially since it joined the WTO in 2001. The data coverage is long enough to track a shift in the PRC’s comparative advantages from more labor-intensive products toward more capital- and technology-intensive products (to be discussed fully ) This has different implications for the labor market as the intensity of the competition effects is expected to shift from lower-skilled to higher-skilled workers in Japanese manufacturing
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
