Made in China, sold in Norway: Local labor market effects of an import shock

We analyze whether increased exposure to import competition from China threatens the Nordic model. We find negative employment effects for low-skilled workers, and observe that low-skilled workers tend to be pushed into unemployment or leave the labor force altogether. We find no evidence of wage effects. We partly expect this in a Nordic model where firms are flexible at the employment margin, while centralized wage bargaining provides less flexibility at the wage margin. The import shock is smaller, and our estimates suggest that import competition from China explains almost 10% of the reduction in the manufacturing employment share from 1996 to 2007 which is half of the effect found by Autor et al. (2013) for the US.