The dragon down under: The regional labour market impact of growth in Chinese imports to Australia

Abstract

Imports of manufactured goods from China to Australia grew more than eleven-fold in real US dollar terms between 1991 and 2006. This study uses differences in industry structure between regions to identify the impact of that growth on labour market outcomes in Australia. Overall, the growth in Chinese imports is estimated to have reduced the ratio of manufacturing employment to population by 1.6 percentage points, and manufacturing employment by 221,000 workers. Adjustment to this impact on local manufacturing employment appears to have occurred through labour mobility between regions, but also increased rates of unemployment and non-participation. Growth in manufacturing imports from other Asian countries during this period, by contrast, is found to have had little impact on manufacturing employment in Australia – with the main explanation for the difference being that Chinese imports were weighted more to manufacturing sectors experiencing slower growth in domestic consumption (absorption) and with high labour-intensity. The study concludes by interpreting the estimated impacts of Chinese imports on Australia against estimates for other countries.