German plant closure and the China shock

ABSTRACT

This paper explores administrative plant data from Germany to study the role of import competition for plant closure. The data used in this study allow inferring a precise measure of plant closure by assessing co-worker movements across plants and time. Chinese imports can be associated with a higher propensity of the plant closure. We present a comparison between results based on a more common plant exit variable with regression outcomes that fit the model to the more precise plant closure information. The sign of the effect is independent of the choice of the outcome variable but the magnitude of the effect changes considerably. Moreover, we find that the effect is non-linear as newly established plants are better prepared for the import shock compared to older establishments.

KEYWORDS:

• Plant Exit
• International Trade
• Import China
• Worker Data

JEL CLASSIFICATION:

• F10
• F16

Acknowledgments

We like to thank Dauth et al. (2014) for sharing their code of product-industry classifications with us.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The outcome of their approach is provided as an extension file to the BHP.

² The authors define an establishment exit if the largest clustered outflow of workers is less than 30% relative to the size of the disappearing establishment identifier and not more than 80% of the successor if the successor constitutes a newly appearing establishment identifier (‘atomized death’).

³ We utilize that data provided the Observatory of Economic Complexity. For further details see Simoes and Hidalgo (2011).

⁴ See Autor, Dorn, and Hanson (2013), Dauth, Findeisen, and Suedekum (2014).

⁵ We use the same set of countries as in Dauth, Findeisen, and Suedekum (2014), namely Australia, Canada, Japan, Norway, New Zealand, Sweden, Singapore, and the United Kingdom.