Worker Adjustment to Trade Shocks: Where You Work or What You Do?

Abstract

I study the adjustment of Brazilian workers to rising import competition from China. I compare the impact of trade exposure based on workers’ initial industries, geographic regions, and occupations on long-term earnings and employment. Occupation-based exposure to this trade shock leads to the largest adjustment costs in terms of both earnings and employment. I show these adjustment costs are heterogeneous and depend on workers’ educational attainment and tenure at their initial employers. I disentangle the impact of trade on earnings at workers’ initial employers or industries versus the impact on earnings outside of these.