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Trade Diversion and Labour Market Adjustment: Vietnam and the U.S. - China Trade War

• Researchers:

  • Karin Mayr-Dorn, Gaia Narciso, Duc Anh Dang and Hien Phan

• Partners:

  • Irish Aid, Fulbright Association

• Location:

  • Vietnam

• Sample:

  • Between 128,000 and 135,000 working-age individuals per quarter from the Vietnam Labour Force Survey (LFS)

• Timeline:

  • 2017-2019

• Theme:

  • Trade Diversion, Trade War

• Description:

  • This paper investigates the effects of the U.S.-China trade war on labour market outcomes in a third country, Vietnam. We exploit variation in the extent of U.S. tariff hikes on Chinese imports across industries as well as pre-existing industry employment patterns in Vietnam. We find that Vietnamese individuals and districts that are more exposed to the trade war experience higher employment and wages in the manufacturing sector. This is true in particular for women. Our findings reveal that bilateral trade policy can substantially affect labour markets in third countries.