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This paper examines the hypothesis that manufacturing industries in Japan that have been exposed to import competition from the People’s Republic of China (PRC) experience greater skill upgrading (increased demand for skilled workers). Using an industry panel dataset over the period 1980–2010, we exploit variations of worker skill categories by occupation, paired with detailed information and communication technology investment data in the employment share regression. We find that while the PRC’s comparative advantages in exports have shifted from labor-intensive to more capital-intensive products, this has not resulted in substituting skilled workers in Japanese manufacturing. Rather, it has had the profound positive effect of raising overall demand for skilled workers. Most of the competition effects were felt among production workers, leaving middle-skilled workers largely unaffected.


Suggested Citation
Yamashita, N. (2017). The People's Republic of China's import competition and skill demand in Japanese manufacturing (ADBI Working Papers Series No. 644). Tokyo: Asian Development Bank Institute.

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© Asian Development Back. Available at ADB’s Open Access Repository under a Creative Commons Attribution license (CC BY 3.0 IGO).