Regional Divergence and Import Competition

During the last decades, regions in the United States are diverging, with more skill-intensive regions having higher wage and skill premium growth and becoming even more skill-intensive. In this paper, I show that this may be driven in part by trade with China. I show that the effects of rising exposure to import competition are heterogeneous among regions depending on the prior level of skill-intensity. Indeed, among more skill-intensive regions, greater exposure to Chinese imports increases skilled-wages and skill premium, and it attracts skilled workers to those regions. Besides, I show that changes might be caused by differential sectoral reallocations