Rising Import Competition in Canada and its Employment Effect bySkill Group and Gender: Evidence from the 'China Shock'Press Release – Ottawa, August 15, 2018
The Centre for the Study of Living Standards today released two reports prepared for
Global Affairs Canada entitled “Rising Import Competition in Canada and its Employment Effectby Skill Group: Evidence from the China Shock” and “Rising Import Competition in Canada andits Employment Effect by Gender: Evidence from the China Shock”.
Previous CSLS research report, “The Effect of Import Competition on Employment inCanada: Evidence from the China Shock”, found that the direct effect of rising Chinese importcompetition in Canadian manufacturing amounted to a net loss of just over 100 thousand
manufacturing jobs over the 2001-2011 period, 21 per cent of the actual observed decline in
manufacturing employment.
However, it is important to study how the loss was distributed among workers inmanufacturing. By constructing occupation- and gender-specific trade exposure measures, weestimate the employment effect of import shocks by skill group and by gender. For skill groups,
we classify occupations in the National Occupation Classification according to their skill level(high, mid, and low) and skill type (management, professional, technical/paraprofessional, otherservices, and production), respectively.
The key findings of the two reports are highlighted below:
During the period in which Chinese import penetration rose substantially (i.e.
2001-2011), the total trade-induced job loss in manufacturing was largely driven by lowskilled occupations. A trade-induced job loss for low-skilled occupations amounted to 90
thousand, 27 per cent of the total decline in low-skilled employment in manufacturing(334 thousand).
The trade-induced job loss for low-skilled occupations was equally distributed
between males and females despite a much smaller female share in the total low-skilledemployment in manufacturing. In relative terms, females had a larger job loss than males
did: the loss accounted for 32 per cent of the total decline in low-skilled jobs of womenand 21 per cent of the total decline in low-skilled jobs of men.
When analyzed by skill type, the following groups had significant trade-induced
job losses during the 2001-2011 period:
Occupations in other services – a loss of 58 thousand (87 per cent of the total
decline in other services employment).

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Occupations in technical/paraprofessional - a loss of 20 thousand (60 per cent ofthe total decline in technical/paraprofessional employment)Occupations in production – a loss of 52 thousand (17 per cent of the total decline
in production employment)

The trade induced job loss for other services and technical/paraprofessional wasdriven by females as we found no statistical evidence that males in these occupations wereaffected by rising Chinese import penetration.
The trade-induced job loss for production occupations was equally distributed
between males and females, again, despite a smaller female share in the total production
employment in manufacturing. In relative terms, Chinese import penetration can explain
29 per cent of the total decline in jobs of females in production and 17 per cent of thetotal decline in jobs of males in production.

A greater job loss for females can be partly explained by the fact that females
experienced a larger increase in trade exposure to China as they had high employment
shares in sectors with relatively large annual increases in import penetration ratio over the2001-2011 (e.g. Textile Product Mill, Clothing Manufacturing, Leather and Allied ProductManufacturing).
The key message of our reports is that the distributional effect of trade is evident
in both skill and gender dimensions as the relative importance of Chinese importpenetration in explaining the observed decline in employment varies greatly across skill
groups and genders. One important implication from the results by skill level is that tradewith China did not lead to "employment polarization" in Canada: a U-shaped
employment growth in skill level where mid-skilled experiencing a relatively slower
employment growth than low- and high-skilled.
By exploiting variations in local employment rates and local trade exposure across
122 CMAs/CAs in Canada, we also assess the net effect of labour reallocation and demand
effects operating within localities. We find that the labour reallocation is important inoffsetting the negative direct effects but the degree of reallocation within local labour
markets varies across skills. The labour reallocation to unaffected sectors was less successful
for low-skilled occupations when analyzed by skill level and for production occupations
when analyzed by skill type. For production occupations, we found that the labour
reallocation of female workers was fully inhibited by negative local demand effects.

The two reports focus on the cost side of the trade with China with emphasis on the employment
effect. Policymakers should also pay attention to potential benefits from trade as much as we doto distribution concerns of trade. We would like to emphasize that costs should be set againstbenefits in a balanced and principled manner so that one can assess the full picture on trade.
The report is posted at http://www.csls.ca/reports/csls2018-02.pdf and at
http://www.csls.ca/reports/csls2018-03.pdf

For further information, please contact:
Andrew Sharpe
Executive Director
Centre for the Study of Living Standards
613-233-8891
andrew.sharpe@csls.ca
The Centre for the Study of Living Standards (CSLS) is a national, independent, Ottawabased not-for-profit research organization. Its primary objective is to contribute to a better
understanding of trends and determinants of productivity, living standards, and economic wellbeing in Canada through research.