Shock Propagation within Multisector Firms

Wed, 01 Jan 2025 00:00:00 +0000

This paper documents a novel channel through which trade shocks propagate across industries: the internal networks of U.S. multisector firms (the working paper circulated as “Import Competition and Firms’ Internal Networks”). The motivation is that prior China-shock research traced effects through input-output networks and agglomeration but overlooked multisector firms, which account for 71% of total U.S. manufacturing employment and 25% of overall U.S. employment. When a firm owns establishments in several industries with differing exposure to Chinese import competition, it is ex ante ambiguous whether an unexposed plant gains (worker reallocation toward it), loses (dampened firm-level production from complementarities or financial constraints), or is unaffected (independent plants).

Jay Hyun | Macro Paper Warehouse

Shock Propagation within Multisector Firms