Household responses to trade shocks

Abstract

We study the impact of Chinese import competition in the 2000s on workers and their households in England and Wales. We document both the direct employment changes of individuals affected by trade exposure, as well as the employment response of individuals whose partner is exposed to trade. We find substantial differences by gender. Men respond to import competition by increasing labour force participation at older ages, and by moving into self-employment. This is true both in response to their own trade exposure, and as an 'added worker effect' when their partner is exposed to the shock. By contrast, we find no such response for women, who do not increase labour supply following shocks affecting their partners. Gender differences in employment responses reflect differing opportunities in the self-employed sector: male workers exposed to import competition disproportionately enter self-employed jobs in historically male-dominated occupations, as do men reacting to shocks affecting their partners.