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Imports as a Cause of Injury: The Case of the U.S. Steel Industry

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  • Gene M. Grossman

Abstract

Recently, the United States International Trade Commission conducted a Section 201 or "escape clause" hearing to determine whether imports have been the most significant cause of injury to the U.S. steel industry. This paper suggests a methodology for conducting the necessary analysis for such determinations, and applies it to the case of the steel industry. First, a reduced-form equation for steel industry employment is derived and estimated. The equation specifies industry employment as a function of the price of imported steel, the price of energy, the price of iron ore, a time trend, real income and (in one variant) the wage rate in the steel industry. The estimated coefficients are used to perform counter factual simulations, which allow us to attribute changes in industry employment to their proximate causes. The analysis reveals that for the period from 1976 to 1983, a secular shift away from employment in the steel industry has been the most important cause of injury. For the shorter period from 1979 to 1983, secular shift and import competition are roughly equal in importance, with the latter being entirely the result of the substantial appreciation of the U.S. dollar during this period.

Suggested Citation

  • Gene M. Grossman, 1984. "Imports as a Cause of Injury: The Case of the U.S. Steel Industry," NBER Working Papers 1494, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1494
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    1. Alan V. Deardorff & Robert M. Stern, 2011. "The Effects of the Tokyo Round on the Structure of Protection," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 37, pages 503-530, World Scientific Publishing Co. Pte. Ltd..
    2. Grossman, Gene, 1982. "The Employment and Wage Effects of Import Competition in the United States," Foerder Institute for Economic Research Working Papers 275356, Tel-Aviv University > Foerder Institute for Economic Research.
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