2018/08/01 by Zhi Wang, Shang‐Jin Wei, Xinding Yu +1 · 1 citation
Economics, Econometrics and Finance · #Global trade and economics #Fiscal Policy and Economic Growth #Regional Economics and Spatial Analysis
paper · pdf · doi:10.3386/w24886
openalex publication_date 2018/08/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
The United States imports intermediate inputs from China, helping downstream US firms to expand employment. Using a cross-regional reduced-form specification but differing from the existing literature, this paper (a) incorporates a supply chain perspective, (b) uses intermediate input imports rather than total imports in computing the downstream exposure, and (c) uses exporter-specific information to allocate imported inputs across US sectors. We find robust evidence that the total impact of trading with China is a positive boost to local employment and real wages. The most important factor is employment stimulation outside the manufacturing sector through the downstream channel. This overturns the received wisdom from the reducedform literature and provides statistical support for a key mechanism hypothesized in general equilibrium spatial models.