Winners and Losers in the Labour Market: Heterogeneous Effects from Brazil-China Trade

About this event

China's recent growth and emergence into the world economy is one of the largest world economic events of recent times. Much of the reduced-form literature on the effects of this 'China shock' on other countries have viewed China as a competitor, affecting local outcomes mainly via import competition. But China is also an increasingly large consumer of goods produced abroad, and an increasing share of its import demand is for primary goods, in which developing countries tend to specialize. We examine the effects of these two sides of the 'China shock' on local labour markets in a large developing country which has seen rapid growth in both imports of manufactures from China and exports to China of primary goods -- Brazil. Using Brazilian census data, we compare trends in migration, unemployment, employment structure (primary/manufacturing/services), informality and takeup of social assistance in localities affected by the 'China competition shock' and the 'China demand shock', and find evidence of significant effects of both sides of the 'China shock' on all of these dimensions.