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Survival of the Best Fit: Exposure to Low-Wage Countries and the (Uneven) Growth of U.S. Manufacturing Plants

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Author Info

  • J. Bradford Jensen
  • Andrew Bernard
  • Peter Schott

Abstract

This paper examines the role of international trade in the reallocation of U.S. manufacturing within and across industries from 1977 to 1997. Motivated by the factor proportions framework, we introduce a new measure of industry exposure to international trade that focuses on where imports originate rather than on their overall level. We find that plant survival and growth are negatively associated with industry exposure to low-wage country imports. Within industries, we show that manufacturing activity is disproportionately reallocated towards capital-intensive plants. Finally, we provide the first evidence that firms adjust their product mix in response to trade pressures. Plants are more likely to switch industries when exposure to low-wage countries is high.

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File URL: ftp://ftp2.census.gov/ces/wp/2005/CES-WP-05-19.pdf
File Function: First version, 2005
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 05-19.

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Length: 27 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:cen:wpaper:05-19

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Keywords: Low-Wage Country Import Competition; Manufacturing Plant; Comparative Advantage;

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References

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  1. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2003. "Falling trade costs, heterogeneous firms and industry dynamics," LSE Research Online Documents on Economics 20027, London School of Economics and Political Science, LSE Library.
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  17. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
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  24. repec:fth:prinin:419 is not listed on IDEAS
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