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Abstract

This paper embeds an analysis of self-employment into the framework of international trade and local economies, seeking to explain how entrepreneurship can shape local labor market response to trade shocks. We investigate the cross-effect of self-employment and change in Chinese imports on US county labor markets during 2000-2007. Our empirical results suggest that counties with higher self-employment experience smaller job losses and wage cuts in response to Chinese imports. That suggests self-employment or entrepreneurship activities in local economies mitigate adverse impacts of trade penetration.

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