In 2001, the U.S. normalized long-term trade relations with China, and China joined the World Trade Organization — moves many expected to help both economies. Instead, over the next several years, inexpensive imports from China significantly undercut U.S. manufacturing, especially in industries such as textiles and furniture-making. By 2011, this “China shock” from trade was responsible for the loss of 1 million U.S. manufacturing jobs, and 2.4 million jobs overall. Many locales were especially hard hit, especially in the South Atlantic and Deep South regions. So, while consumers nationally benefitted from slightly cheaper goods, workers in many places had their livelihoods devastated. That was the attention-grabbing finding of a 2013 paper by MIT economist David Autor and his colleagues David Dorn and Gordon Hanson.
Now Autor, Dorn, and Hanson have a follow-up paper, “The Persistence of the China Shock,” forthcoming in the Brookings Review, about the long-term effects of the China shock. They find that trade pressure from Chinese imports leveled out after 2011 — yet the hardest-hit U.S. areas have not bounced back from the rapid declines they suffered. MIT News spoke to Autor, the Ford Professor of Economics at MIT, about the new findings.