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Trade Costs and Job Flows: Evidence from Establishment-Level Data

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  • Jose Luis Groizard

    ()
    (Department of Economics, Universitat de les Illes Balears)

  • Priya Ranjan

    ()
    (Department of Economics, University of California-Irvine)

  • Jose Antonio Rodriguez-Lopez

    ()
    (Department of Economics, University of California-Irvine)

Abstract

We present evidence of the impact of input and output trade liberalization on establishment-level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or output trade costs causes job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. We also show that input trade liberalization has larger effects on establishment-level job flows than output trade liberalization.

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Bibliographic Info

Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 111208.

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Length: 34 pages
Date of creation: Feb 2012
Date of revision: Oct 2013
Handle: RePEc:irv:wpaper:111208

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Keywords: Heterogeneous firms; Job flows; Trade costs;

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  1. Ghironi, Fabio & Melitz, Marc J, 2004. "International Trade and Macroeconomic Dynamics with Heteroegenous Firms," CEPR Discussion Papers 4595, C.E.P.R. Discussion Papers.
  2. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," NBER Working Papers 12167, National Bureau of Economic Research, Inc.
  3. Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2009. "Why are American Workers getting Poorer? Estimating the Impact of Trade and Offshoring Using the CPS," NBER Working Papers 15107, National Bureau of Economic Research, Inc.
  4. Klein, Michael W. & Schuh, Scott & Triest, Robert K., 2003. "Job creation, job destruction, and the real exchange rate," Journal of International Economics, Elsevier, vol. 59(2), pages 239-265, March.
  5. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
  6. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
  7. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  8. Neumark, David & Wall, Brandon & Zhang, Junfu, 2008. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," IZA Discussion Papers 3888, Institute for the Study of Labor (IZA).
  9. Neumark, David & Zhang, Junfu & Wall, Brandon, 2005. "Employment Dynamics and Business Relocation: New Evidence from the National Establishment Time Series," IZA Discussion Papers 1774, Institute for the Study of Labor (IZA).
  10. Jose L. Groizard & Priya Ranjan & Antonio Rodriguez-Lopez, 2013. "Offshoring, Exporting, and Jobs," CESifo Working Paper Series 4550, CESifo Group Munich.
  11. Pinelopi K. Goldberg & Amit Khandelwal & Nina Pavcnik & Petia Topalova, 2008. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," NBER Working Papers 14416, National Bureau of Economic Research, Inc.
  12. Petia Topalova & Amit Khandelwal, 2011. "Trade Liberalization and Firm Productivity: The Case of India," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 995-1009, August.
  13. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
  14. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
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