Empirical Analysis of the Impact of Imports from China on Employment in Japan

Since China's accession to the WTO, the impact of increased competition from Chinese imports (the "China shock") on employment and productivity in many developed countries has become a major concern for policy makers. The share of manufacturing workers in the total number of employees has been declining, and Japan is no exception. The paper empirically examines the impact of the increase in imports from China on employment using questionnaire information of the Census of Manufactures and the Economic Census for Business Activity as well as the Trade Statistics of Japan and the National Freight Flows Survey (Logistics Census). The main results are twofold. First, imports of intermediate products from China have a positive impact on employment at Japanese firms. Second, imports of capital products from China might have a negative effect on employment growth. Thus, reducing trade barriers in intermediate products, participating in global value chains, and supporting inter- and intra-industry labor mobility for specific workers, regions, and industries that are negatively affected by capital goods are key to employment growth in Japan.

This is the English version of the Japanese Discussion Paper (23-J-021) with some additional information and changes.