Abstract
I use data from the World Input-Output Database and show that trade in information technologies (IT) has a significant contribution to the growth in foreign intermediate goods in the 2001–2014 period. China has strongly contributed to the rise in trade in IT and has become one of the major foreign suppliers of IT. I merge these data with the EU KLEMS database and EU Labour Force Survey and obtain a dataset of 12 European countries and 2001–2007 period. I show that IT imports from China are associated with lower IT prices in European countries. The fall in IT prices has increased the demand for high wage occupations and reduced the demand for medium wage occupations. Nearly 25% of the variation in the demand for occupations can be attributed to the trade with China.
Highlights
Information technologies (IT) are everywhere nowadays and affect the functioning of economies and markets (Roller and Waverman, 2001, Czernich, Falck, Kretschmer, and Woessmann, 2011, Jerbashian and Kochanova, 2017)
It can be important to control for trends in this estimation in order to differentiate the effect of the rasing supply of IT from China from technological progress in IT and the raising demand for it
I use data from the World Input-Output Database and show that trade in IT has a significant contribution to the growth in foreign intermediate goods in 2001-2014 period
Summary
Information technologies (IT) are everywhere nowadays and affect the functioning of economies and markets (Roller and Waverman, 2001, Czernich, Falck, Kretschmer, and Woessmann, 2011, Jerbashian and Kochanova, 2017). Autor et al (2013) show that rising Chinese import competition accounts for about 28 percent of the aggregate decline in US manufacturing employment between 2000 and 2007 To the latter studies, this paper focuses on the demand for occupation groups and differentiates them according to the likely effects of IT on them. It contributes to this literature by showing that trade in inputs, information technologies, affects the demand for occupations by lowering the price of these inputs. The latter result contributes to a growing debate about distributional effects of trade (e.g., Broda and Romalis, 2008, Kanbur, 2015, Antras, de Gortari, and Itskhoki, 2017)
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