Racial and Ethnic Inequality and the China Shock

Minority workers generally have worse economic outcomes than whites, and are disproportionately impacted by many negative shocks. However, we show that Black-white employment gaps narrowed as a result of China's WTO accession because Black workers transitioned to nonmanufacturing employment at higher rates. They also lived in less exposed areas of the country and were less reliant on manufacturing employment at baseline. Hispanic populations in contrast were overrepresented in exposed manufacturing industries and experienced larger overall employment losses. The China shock thus widened Hispanic-white gaps, though this effect was short lived. The lasting negative effects were driven primarily by white workers.