The Impact of International Trade on Manufacturing Employment in Australia: Evidence From the China Shock

Abstract

We examine how the rapid growth in imports of manufactured goods from China affected industry-level employment in Australia from 1991 to 2006. Our analysis incorporates both the direct effect from increased import competition, and indirect spill-over effects from input-output linkages. We estimate that growth in imports from China caused a loss in total manufacturing employment of between 89,900 and 209,800 workers – accounting for 8.5 to 19.8 per cent of manufacturing employment in 1991. Such an effect seems best described as sizable, but not one that by itself spelled the end of manufacturing industry in Australia. The largest impacts from growth in Chinese imports are found for manufacturing industries most exposed to import competition; and for the sub-period from 2001 to 2006.