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The Surprisingly Swift Decline of U.S. Manufacturing Employment

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  • Justin R. Pierce
  • Peter K. Schott

Abstract

This paper finds a link between the sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade. These results are robust to other potential explanations of the employment loss, and we show that the U.S. employment trends differ from those in the EU, where there was no change in policy.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4563.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4563

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Keywords: manufacturing; trade policy; uncertainty; offshoring; supply chains; employment; China; World Trade Organizations; PNTR;

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References

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  1. Khandelwal, Amit & Schott, Peter K. & Wei, Shang-Jin, 2012. "Trade liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters," CEPR Discussion Papers 9246, C.E.P.R. Discussion Papers.
  2. Barry T. Hirsch & David A. Macpherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
  3. Aghion, Philippe & Dewatripont, Mathias & Du, Liqun & Harrison, Ann & Legros, Patrick, 2011. "Industrial Policy and Competition," CEPR Discussion Papers 8619, C.E.P.R. Discussion Papers.
  4. Sourafel Girma & Yundan Gong & Holger Gˆrg & Zhihong Yu, 2009. "Can Production Subsidies Explain China's Export Performance? Evidence from Firm-level Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 863-891, December.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Prospects of tariff increases and manufacturing employment
    by Economic Logician in Economic Logic on 2014-01-07 15:13:00
  2. La concurrence chinoise et le déclin de l’emploi américain
    by ? in D'un champ l'autre on 2014-08-25 19:08:00
  3. Manufacturing (the US and China)
    by UDADISI in UDADISI on 2013-01-08 17:35:00
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Cited by:
  1. Céline CARRERE & Marco FUGAZZA & Marcelo OLARREAGA & Frédéric ROBERT-NICOUD, 2014. "Trade in Unemployment," Working Papers P101, FERDI.
  2. Campbell, Douglas L., 2013. "Relative Prices, Hysteresis, and the Decline of American Manufacturing," MPRA Paper 51723, University Library of Munich, Germany.
  3. Nicholas Bloom & Paul Romer & Stephen Terry & John Van Reenen, 2014. "Trapped Factors and China's Impact on Global Growth," CEP Discussion Papers dp1261, Centre for Economic Performance, LSE.
  4. Christopher L. Foote & Richard W. Ryan, 2012. "Labor-market polarization over the business cycle," Public Policy Discussion Paper 12-8, Federal Reserve Bank of Boston.
  5. Kyle Handley & Nuno Limão, 2013. "Policy Uncertainty, Trade and Welfare: Theory and Evidence for China and the U.S," NBER Working Papers 19376, National Bureau of Economic Research, Inc.
  6. Kondo, Illenin O., 2013. "Trade Reforms, Foreign Competition, and Labor Market Adjustments in the U.S," International Finance Discussion Papers 1095, Board of Governors of the Federal Reserve System (U.S.).
  7. Wolfgang Lechthaler & Mariya Mileva, 2014. "Smoothing the adjustment to trade liberalization," WWWforEurope Working Papers series 61, WWWforEurope.
  8. Lu, Yi & Tao, Zhigang & Zhang, Yan, 2013. "How do exporters respond to antidumping investigations?," Journal of International Economics, Elsevier, vol. 91(2), pages 290-300.
  9. Bown, Chad & Denevers, Michele & Harrison, Ann, 2013. "Why Fracking Won't Bring Back the Factories (Yet)," MPRA Paper 47872, University Library of Munich, Germany.
  10. Autor, David & Dorn, David & Hanson, Gordon H., 2013. "Untangling Trade and Technology: Evidence from Local Labor Markets," IZA Discussion Papers 7329, Institute for the Study of Labor (IZA).
  11. Robert Z. Lawrence & Lawrence Edwards, 2013. "US Employment Deindustrialization: Insights from History and the International Experience," Policy Briefs PB13-27, Peterson Institute for International Economics.
  12. Wolfgang Lechthaler & Mariya Mileva, 2013. "Trade Liberalization and Wage Inequality: New Insights from a Dynamic Trade Model with Heterogeneous Firms and Comparative Advantage," Kiel Working Papers 1886, Kiel Institute for the World Economy.
  13. Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2014. "Trade Policy Uncertainty and Exports: Evidence from China's WTO Accession," CESifo Working Paper Series 4780, CESifo Group Munich.
  14. Consoli,Davide & Vona,Francesco & Rentocchini,Francesco, 2014. "That was then, this is now: Skills and Routinization in the 2000s," INGENIO (CSIC-UPV) Working Paper Series 201306, INGENIO (CSIC-UPV).
  15. Flückiger, Matthias & Ludwig, Markus, 2013. "Chinese Export Competition, Declining Exports and Adjustments at the Industry and Regional Level in Europe," MPRA Paper 48878, University Library of Munich, Germany.

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