Using the dismantling of trade quotas on Chinese textile and clothing products in conjunction

with China's accession to the WTO and an employer-employee matched data-set for the period

1999 to 2010, workers' adjustments to intensified low-wage competition is analyzed. Utilizing

within-industry heterogeneity in workers' exposure to this trade shock, results reveal negative

and significant impact of the low-wage import shock on workers' future earnings and employment

trajectories. The abolishment of quotas leads to higher likelihood of unemployment and shorter

future tenure for workers. While most workers employed by firms exposed to low-wage competition

are influenced negatively to a similar extent at the exposed employer, the degree of adjustment to

the initial shock varies greatly across different types of workers. In particular less-educated, older

and those who had elementary occupations or occupations that require industry-specific training

at the exposed firms had the worst adjustment experience. The results suggest that adjustment

costs are very important and heterogeneous across different types of workers and highlight the

need for targeting specific groups in assistance and adjustment schemes.