Import Competition and Restructuring Strategies: Evidence from Japanese firm-level data

         
Author Name ITO Tadashi (Gakushuin University) / MATSUURA Toshiyuki (Faculty Fellow, RIETI)
Creation Date/NO. June 2025 25-E-059
Research Project Structural Changes in the World Economy and Responses from Japanese Firms and the Government
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Abstract

Using firm-level data from Japan, this study examines how firms restructure in response to import competition from China, with a focus on employment adjustments and industry switching. The results indicate that many firms reduced their workforce in response to rising imports, with production workers experiencing the most substantial job losses. An analysis of the time lag in the effects of import shocks suggests that while the number of production workers declines immediately following an increase in imports, broader employment adjustments and industry switching typically occur after a delay of two or more years. Moreover, a comparison between firms that switched industries and those that did not shows that non-switching firms faced more severe negative impacts from import competition. Offshoring plays a critical role in mitigating these adverse effects.