The research presented here, conducted by Professors David Autor (MIT), David Dorn (University of Zurich), Gordon Hanson (University of California San Diego), and research partners, studies the economic benefits and costs of trade integration. The costs include distributional impacts, which economic theory has long recognized, as well as adjustment costs, which formerly have been underestimated. The case study of China’s rise thus informs broader theory about global trade that can be incorporated into economic policy.
Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists. Meanwhile, developing effective tools for managing and mitigating the costs of trade adjustment is high on the agenda for policymakers and applied economists. Economic understanding of the consequences of international trade should be informed both by economic theory and by a firm evidentiary base that assesses who gains, who loses, by how much, and under what conditions. For an overview of some of this group’s work on that front, see the 2018 article published by IZA World of Labor.
The following interactive graphic was developed by Andrew Van Dam and Jessia Ma of the Wall Street Journal based on data collected by the China Shock research team. This graphic accompanied a WSJ article written by Jon Hilsenrath and Bob Davis.