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There is a popular belief that Chinese imports have devastated US and European manufacturing and contributed to rising inequality. Somewhat paradoxically, the consensus amongst empirical economists is that trade has not been a major cause of rising wage inequality (although this is largely based on datasets predating China's rise). The authors argue that both views have underestimated the positive impact of Chinese trade on technical change. They examine the impact of the growth of Chinese imports innovation and IT diffusion using a panel of over 23,000 European establishments through 2007.
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