Local Labour Market Effects of Manufacturing Import Competition: Evidence from the Netherlands

In my thesis I construct a region-specific measure of the increase in exposure to manufacturing import competition from China in the Netherlands over the period 1996-2007, based on start-of-period regional sector specializations and differences in national import growth across sectors. Unsurprisingly, I find a strongly negative effect of this measure on the contemporaneous change in local manufacturing employment. Next, I estimate the impact of import exposure on four potential channels of adjustment to adverse labour demand shocks. The most robust evidence is found in support of the conclusion that the China shock has been absorbed by a drop in the labour force participation rate, which highlights the adverse effects to some workers of opening up to trade. I also find some evidence of migration and inter-sectoral mobility playing a role. As an extension, I estimate the effect of import exposure on anti-EU sentiment and voting for populism, but I detect no statistically significant relationship.