Value Added Exports and U.S. Local Labor Markets: Does China Really Matter?

In this paper, our main focus is the direct contribution of the Chinese economy to changes in U.S. labor market outcomes. Our results indicate that the effects of continuously rising value-added exports from China to the U.S. depend on the position of the Chinese exporting industry in the global value chain. In particular, we find that an increase in U.S. exposure to value-added exports from China in industries with high degree of downstreamness leads to negative effects on the share of manufacturing employment, while the same is not present in the case of industries with low degree of downstreamness. Moreover, our results also suggest that the effects of an increase in U.S. exposure to value-added exports from China on average wages and on unemployment levels depends on the position of the Chinese industry in the global value chain.