Labour market adjustment to third-party competition: evidence from Mexico

Raymond Robertson*, Timothy J. Halliday, Sindhu Vasireddy

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

China's exports reduce wages in importing countries, but few studies have looked at competition in third-party markets. We examine labour market outcomes in Mexico's apparel and textile sectors associated with US apparel and textile imports from China. Using data on US imports in conjunction with quarterly Mexican labour force surveys, we show that US imports from China are associated with a reduction of employment in Mexico's apparel and textile sectors. These effects are the most pronounced for the least educated. Wages were not impacted on net except for possibly the poorest which would indicate stronger local labour market ties in the left tail of the wage distribution. Finally, the effects of trade-induced demand shocks dissipate after about two quarters indicating low firm-level adjustment costs.

Original languageEnglish
Pages (from-to)1977-2006
JournalWorld Economy
Volume43
Issue number7
Early online date19 Feb 2020
DOIs
Publication statusPublished - Jul 2020

Keywords

  • Apparel
  • China
  • Inequality
  • Mexico
  • Trade
  • Wages

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