Heterogeneous Impact of Import Competition on Firm Organization: Evidence from Japanese firm-level data

This paper empirically investigates the effect of import competition on within-firm employment reorganization using Japanese firm-level data sets. We conduct a firm-level examination of whether the import competition against low wage countries leads to the shift from manufacturing activity to non-manufacturing activity, such as headquarter services or R&D. Moreover, we explore the heterogeneity of impacts of import competition according to firm size and export status. We find that competition from Chinese imports induces manufacturing firms to increase their share of service workers, especially those workers that engage in wholesale & retail, and in other service activities.