Why are American Workers getting Poorer? Estimating the Impact of Trade and Offshoring Using the CPS
AbstractPrevious studies typically find small or insignificant effects of globalization on US workers. We argue that much of the impact on wages has been missed because globalization has led workers to move from higher paid manufacturing jobs to lower paid service jobs. To show this, we link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys. Previous research focused on industry-level exposure to globalization, which we show has no significant impact on worker wages. Our new measure of occupational exposure to globalization shows significant effects of globalization on wages. Offshoring to low wage countries is associated with wage declines for US workers, and the workers most affected are those performing routine tasks. Import competition is associated with wage declines, while exports are associated with wage increases. We present evidence that globalization has led to the reallocation of workers away from higher wage manufacturing jobs into other sectors and other occupations. We estimate that occupation switching due to trade led to real wage losses of 12 to 17 percent.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15107.
Date of creation: Jun 2009
Date of revision:
Note: EEE ITI
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-INT-2009-07-03 (International Trade)
- NEP-LAB-2009-07-03 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
- Richard Layard & Stephen Nickell, 1998.
"Labour Market Institutions and Economic Performance,"
CEP Discussion Papers
dp0407, Centre for Economic Performance, LSE.
- Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
- Nickell, S. & Layard, R., 1997. "Labour Market Institutions and Economic Performance," Papers, Centre for Economic Performance & Institute of Economics 23, Centre for Economic Performance & Institute of Economics.
- Gene M. Grossman & Esteban Rossi-Hansberg, 2006.
"Trading Tasks: A Simple Theory of Offshoring,"
NBER Working Papers
12721, National Bureau of Economic Research, Inc.
- David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
- Mary E. Lovely & J. David Richardson, 2000.
"Trade Flows and Wage Premiums: Does Who or What Matter?,"
in: The Impact of International Trade on Wages, pages 309-348
National Bureau of Economic Research, Inc.
- Mary E. Lovely & J. David Richardson, 1998. "Trade Flows and Wage Premiums: Does Who or What Matter?," NBER Working Papers 6668, National Bureau of Economic Research, Inc.
- James Harrigan, 1998.
"International trade and American wages in general equilibrium, 1967-1995,"
46, Federal Reserve Bank of New York.
- James Harrigan, 2000. "International Trade and American Wages in General Equilibrium, 1967-1995," NBER Chapters, in: The Impact of International Trade on Wages, pages 171-196 National Bureau of Economic Research, Inc.
- James Harrigan, 1998. "International Trade and American Wages in General Equilibrium, 1967 - 1995," NBER Working Papers 6609, National Bureau of Economic Research, Inc.
- Robert Z. Lawrence, 2008.
"Blue-Collar Blues: Is Trade to Blame for Rising US Income Inequality?,"
Peterson Institute Press: Policy Analyses in International Economics,
Peterson Institute for International Economics, number pa85, November.
- Robert Z. Lawrence, 2008. "Blue-Collar Blues: Is Trade to Blame for Rising US Income Inequality?," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number pa85, July.
- Gregory Mankiw, N. & Swagel, Phillip, 2006.
"The politics and economics of offshore outsourcing,"
Journal of Monetary Economics,
Elsevier, vol. 53(5), pages 1027-1056, July.
- N. Gregory Mankiw & Phillip Swagel, 2006. "The Politics and Economics of Offshore Outsourcing," Harvard Institute of Economic Research Working Papers 2120, Harvard - Institute of Economic Research.
- N. Gregory Mankiw & Phillip Swagel, 2006. "The Politics and Economics of Offshore Outsourcing," NBER Working Papers 12398, National Bureau of Economic Research, Inc.
- Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
- Noel Gaston & Daniel Trefler, 1994. "Protection, trade, and wages: Evidence from U.S. manufacturing," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(4), pages 574-593, July.
- Robert C. Feenstra, 2000. "The Impact of International Trade on Wages," NBER Books, National Bureau of Economic Research, Inc, number feen00-1, Ekim.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.