Imports, Exports, and Employment: India’s Trading Relationship with China

This paper examines the effect of increased import competition and export demand on local labour markets in the context of India’s trading relationship with China. Using an instrumental variables approach, I find that Indian districts exposed to Chinese imports experience decreased manufacturing employment growth relative to their positive pre-existing trend with no offsetting adjustment in services employment or population. The negative employment effect of imports is greater for large establishments. On average, manufacturing employment does not grow in response to export demand shocks, but districts with sufficient development, density, or access to Chinese markets see increased manufacturing employment in response to Chinese export demand.

The Journal of Development Studies