The China effect: Evidence from data at firm level in Thailand |
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| Institution: | 1. Institute of World Economy, Shanghai Academy of Social Sciences, 200020, Shanghai, China;2. Department of Economics, University of Illinois at Urbana-Champaign, 61802, Champaign, USA;3. Institute of World Economy, Fudan University, 200433, Shanghai, China;4. Shanghai Institute of International Finance and Economics, 200433, Shanghai, China;1. Department of Medical Nursing, Faculty of Nursing, Prince of Songkla University, Thailand;2. Department of Educational Technology, Faculty of Education, Prince of Songkla University, Thailand;1. Department of Economics, College of Business, University of Texas at San Antonio, One UTSA Circle, San Antonio, Texas 78249-0633, United States;2. Department of Economics, 836 Bolton Hall, College of Letters and Science, University of Wisconsin Milwaukee, P.O. Box 413, Wisconsin 53201, United States;1. University of Hamburg, Germany;2. GIGA German Institute of Global and Area Studies, Institute of Asian Studies, Rothenbaumchaussee 32, 20148 Hamburg, Germany;3. Radboud University Nijmegen, Department of Economics, P.O. Box 9108, 6500 HK Nijmegen, The Netherlands |
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| Abstract: | This study investigates how competition with Chinese imports affects firms in Thailand. Using World Bank data on Thailand and United Nations trade data from 2003 to 2006, the empirical results show that there is no significant impact of Chinese import competition on employment, wages, or labor income share. However, further checks show that for firms with lower productivity, the impact on employment and labor income share is more likely to be negative. The impact of Chinese import competition on profit margins is significantly positive. Considering the impact on labor income share and profit margins, we conclude that because of Chinese import competition, income distribution possibly goes in disfavor of labor. Our study shows that the impact of Chinese import competition on the skilled labor ratio is positive and significant. This result suggests that Thai firms are on the path to skill upgrading as a result of Chinese import competition, which is helpful for Thailand’s long-run economic growth. As firms with low productivity are more likely to be negatively affected by Chinese import competition, improving productivity is still an efficient way to counter such competition. |
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| Keywords: | Chinese import competition Income distribution Skill upgrading |
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