Trade and labor markets: Lessons from China’s rise

International trade integration creates diffuse benefits and concentrated costs. Until recently, economists were sanguine about the limited practical relevance of theoretical implications for workers in developed countries. Evidence from the China Shock has overturned this benign view. China’s rapid rise, while enormously positive for world welfare, has created identifiable losers in trade-impacted industries and the labor markets in which they are located. To mitigate the harms and share the benefits of trade integration more broadly, policymakers should consider modernizing trade adjustment programs, providing wage insurance to displaced workers, and expanding the set of workers eligible for work-contingent wage support, such as the US Earned Income Tax Credit. Imports from China affect government transfer receipts in commuting zones, 1990–2007 ELEVATOR PITCH