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The Employment and Wage Effects of Import Competition in the United States

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  • Gene M. Grossman

Abstract

A new methodology is developed to determine the extent to which import competition has been responsible for labor displacements and wage movements inspecific, allegedly trade-impacted sectors. The procedure involves the estimation of reduced-form wage and employment equations by sector. These equations are first derived from a more complete structural model of general equilibrium resource allocation.The proposed methodology is applied to nine manufacturing sectors in the United States. The sensitivity of employment to the domestic price of imports varies significantly across these nine sectors, whereas industry wages are relatively unaffected by movements in the price of the foreign good.Counterfactual simulations are performed under the hypothetical assumption of no intensification or abatement of import competition from 1967-1979. The differences between the paths of unemployment and wages so generated and the actual, historical paths are attributed to the effects of import competition.Imports have been responsible for the loss of a large number of jobs in only one industry, and for a significant loss in wages in two industries, among the nine studied.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1041.

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Date of creation: Dec 1982
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Publication status: published as Grossman, Gene M. "The Employment and Wage Effects of Import Competition in the United States." Journal of International Economic Integration, Vol. 2, No. 1, (Spring 1987), pp. 1-23.
Handle: RePEc:nbr:nberwo:1041

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  1. Eric Verreydt & Jean Waelbroeck, 1982. "European Community Protection against Manufactured Imports from Developing Countries: A Case Study in the Political Economy of Protection," NBER Chapters, in: Import Competition and Response, pages 369-400 National Bureau of Economic Research, Inc.
  2. Linda Gard & James Riedel, 1980. "Safeguard protection of industry in developed countries : Assessment of the implications for developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 116(3), pages 471-492, September.
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Cited by:
  1. 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.
  2. Ann Harrison & Ana Revenga, 1995. "The Effects of Trade Policy Reform: What Do We Really Know?," NBER Working Papers 5225, National Bureau of Economic Research, Inc.
  3. Grossman, Gene M., 1986. "Imports as a cause of injury: The case of the U.S. steel industry," Journal of International Economics, Elsevier, vol. 20(3-4), pages 201-223, May.
  4. Naoko Shinkai, 2000. "¿Explica el teorema Stopler-Samuelson el desplazamiento de los salarios? El vínculo entre el comercio internacional y los salarios en países latinoamericanos," Research Department Publications 4238, Inter-American Development Bank, Research Department.
  5. Robert E. Baldwin, 1995. "The Effects of Trade and Foreign Direct Investment on Employment and Relative Wages," OECD Jobs Study Working Papers 4, OECD Publishing.
  6. Moser, Christoph & Urban, Dieter M & Weder di Mauro, Beatrice, 2008. "International Competitiveness, Job Creation and Job Destruction - An Establishment Level Study of German Job Flows," CEPR Discussion Papers 6745, C.E.P.R. Discussion Papers.
  7. Naoko Shinkai, 2000. "Does the Stopler-Samuelson Theorem Explain the Movement in Wages? The Linkage Between Trade and Wages in Latin American Countries," Research Department Publications 4237, Inter-American Development Bank, Research Department.
  8. Riccardo Faini & Anna M. Falzoni & Marzio Galeotti & Rodolfo Helg & Alessandro Turrini, 2001. "Importing Jobs And Exporting Firms? On The Wage And Employment Implications Of Italy’S Trade And Foreign Direct Investment Flows," International Trade 0103002, EconWPA.
  9. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
  10. John M. Abowd & Thomas Lemieux, 1991. "The Effects of International Competition on Collective Bargaining Outcomes: A Comparison of the United States and Canada," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 343-367 National Bureau of Economic Research, Inc.
  11. Oscarsson, Eva, 2000. "Trade, Employment and Wages in Sweden 1975-93," Research Papers in Economics 2000:8, Stockholm University, Department of Economics.

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