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How Did Exchange Rates Affect Employment In U.S. Cities?

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  • Haifang Huang
  • Yao Tang

Abstract

type="main" xml:id="coep12159-abs-0001"> We estimate the effects of exchange rate on U.S. employment, exploiting differences in industrial composition across major cities. We find that a 1% depreciation of export-weighted real exchange rate has a positive 0.98% direct effect on manufacturing employment. Its indirect effect on local nonmanufacturing employment rises with the size of the local manufacturing sector, consistent with the hypothesis that there exists a local spillover from the tradable to the nontradable sector. In cities with heavy concentration of manufacturing employment, the indirect effect is statistically significant and about 60% as large as the direct effect measured by the number of jobs. (JEL F3, F1, J2)

Suggested Citation

  • Haifang Huang & Yao Tang, 2016. "How Did Exchange Rates Affect Employment In U.S. Cities?," Contemporary Economic Policy, Western Economic Association International, vol. 34(4), pages 678-697, October.
    • Handle: RePEc:bla:coecpo:v:34:y:2016:i:4:p:678-697
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    Cited by:

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    2. Lina Cardona-Sosa & Fredy Gamboa-Estrada & Jesahel Higuera-Barajas, 2019. "Cheap employment: ¿Aumenta el empleo manufacturero con una depreciación real?," Borradores de Economia 1062, Banco de la Republica de Colombia.
    3. Peter H. Egger & Johannes Schwarzer & Anirudh Shingal, 2018. "Labour market effects of currency appreciation: The case of Switzerland," RSCAS Working Papers 2018/30, European University Institute.

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    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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