3. “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade,” by David Autor, David Dorn and Gordon Hanson
This is the paper that shook the world of economics. Looking at local data, Autor et al. found that import competition from China was devastating for American manufacturing workers. People who lost their jobs to the China Shock mostly didn’t find new good jobs -- instead they took big permanent pay cuts or went on welfare. The authors also claim that the China Shock was so big that it reduced overall U.S. employment. This paper has thrown a huge wrench into the free-trade consensus among economists. It also might help explain the election results. Expect to hear it cited again and again.
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