1. The China Syndrome: Local Labour Market Effects of Import Competition
Citation: Autor et al. [2013]. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States." American Economic Review, 103(6): 2121-2168.
Research question. Does rising import competition from China cause declines in US manufacturing employment, wages, and overall earnings?
Identification strategy. Bartik shift-share instrumental variable. Chinese import growth in other high-income countries instruments for Chinese import exposure in US commuting zones, exploiting the supply-side nature of China's export boom.
Key result. A $1,000 increase in per-worker Chinese import exposure reduces manufacturing employment by 0.6 percentage points as a share of working-age population. Over 1990-2007, the China shock accounts for roughly one-quarter of the decline in US manufacturing employment. Displaced workers do not smoothly transition to other sectors; instead, they move into non-employment and government transfers.
Takeaway. Trade liberalisation with a large, low-cost entrant generates concentrated local employment losses with limited offsetting gains through labour reallocation, challenging simple Heckscher-Ohlin predictions.
2. Railroads of the Raj: Estimating the Impact of Transportation Infrastructure
Citation: Donaldson [2018]. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure." American Economic Review, 108(4-5): 899-934.
Research question. Do transportation networks raise real incomes, and through what mechanism?
Identification strategy. Panel fixed effects with an instrumental variable based on hypothetical least-cost rail routes connecting major cities in colonial India. Districts along geographically determined routes received railways for non-economic reasons.
Key result. Railway access raises district-level real agricultural income by approximately 16%. The mechanism operates through reductions in trade costs: railway access reduces commodity price dispersion across districts by about 80%, consistent with market integration through arbitrage. Structural model simulations imply that removing the rail network would reduce aggregate agricultural income by 16%.
Takeaway. Transportation infrastructure generates large income gains primarily through trade cost reductions; the effect is well-identified using historical variation in network placement.
3. Trade Integration, Market Size, and Industrialisation: Evidence from China's National Trunk Highway System
Citation: Faber [2014]. "Trade Integration, Market Size, and Industrialization: Evidence from China's National Trunk Highway System." Review of Economic Studies, 81(3): 1046-1070.
Research question. Does highway access promote industrialisation and income growth in peripheral Chinese counties, or does it harm them by exposing local producers to competition from core urban centres?
Identification strategy. Least-cost routing IV, analogous to Donaldson [2018]. Counties that fall along the least-cost path between major cities received highway access for geographic rather than economic reasons.
Key result. Highway access reduces manufacturing employment in peripheral counties by 9-17% relative to unconnected counties. This is the opposite of what models of increasing returns would predict: highways facilitate reallocation of manufacturing to existing industrial centres rather than spreading it. Real wages and per capita GDP fall in connected peripheral counties.
Takeaway. Infrastructure can have distributional losers as well as winners. The direction of the effect depends on the relative strength of market access gains versus competition from hub regions an important nuance for infrastructure investment policy.
4. The Tennessee Valley Authority and Place-Based Policy
Citation: Kline and Moretti [2014]. "Local Economic Development, Agglomeration Economies, and the Big Push: 100 Years of Evidence from the Tennessee Valley Authority." Quarterly Journal of Economics, 129(1): 275-331.
Research question. Do large-scale place-based investments targeting infrastructure, electrification, and industrial promotion at a specific region generate lasting gains in employment and productivity? And if so, who captures the gains?
Identification strategy. Difference-in-differences exploiting the geographic boundary of the Tennessee Valley Authority (TVA). Counties in the TVA service area received large infrastructure and electrification investments beginning in the 1930s; counties just outside the TVA boundary serve as the control group. The authors also compare the TVA counties to synthetic control counterfactuals.
Key result. TVA investment raised manufacturing employment in treated counties by approximately 40% and agricultural productivity by 7.5% by 1960. However, welfare gains were concentrated among landowners and non-agricultural workers rather than broadly shared. General equilibrium migration effects attenuated wage gains as workers moved into the region. By the 1990s, the productivity advantages of TVA counties had largely dissipated.
Takeaway. Place-based policies can generate large employment effects in targeted areas, but welfare analysis requires accounting for general equilibrium effects including migration responses, factor price changes, and the long-run dissipation of initial advantages.
References
- Autor, D. H., Dorn, D., and Hanson, G. H. (2013). The China syndrome: local labor market effects of import competition in the United States. American Economic Review, 103(6):2121-2168.
- Donaldson, D. (2018). Railroads of the Raj: estimating the impact of transportation infrastructure. American Economic Review, 108(4-5):899-934.
- Faber, B. (2014). Trade integration, market size, and industrialization: evidence from China's National Trunk Highway System. Review of Economic Studies, 81(3):1046-1070.
- Kline, P. and Moretti, E. (2014). Local economic development, agglomeration economies, and the big push: 100 years of evidence from the Tennessee Valley Authority. Quarterly Journal of Economics, 129(1):275-331.[cite: 11]