The effect of regional import shocks on job flows in Japanese manufacturing establishments

• This study examines the impact of the China shock on the job flows of establishments. • A dataset of all Japanese manufacturing establishments from 2006 to 2016 is used. • Industry-level imports increased the probability of exit in only a few groups. • Some small establishments used a hibernation strategy to cope with regional imports. • Imports accelerated job creation and destruction in some surviving establishments. Using a dataset of all Japanese manufacturing establishments in 2006 and 2016 and industry- and region-level import shocks, this study examined the impact of the China Shock on the job flows of establishments. Regression analyses found that the industry-level import shock increased the probability of exiting in only a few groups. Interestingly, small establishments in single-unit firms located in non-agglomerated regions adopted a hibernation strategy to cope with the region-level import shock. Furthermore, surviving establishments in this category accelerated both job creation and destruction in response to these two import shocks, thereby amplifying the overall magnitude of job flows. These results became observable owing to the use of establishment-level observations and a detailed classification of job flows.