German plant closure and the China shock

"German plant closure and the China shock"

from Hans-Jörg Schmerer & Andreas Hauptmann

in: Applied Economics Letters, 27(9): 1-5

You can find the paper here.

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.