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Looking for Local Labor Market Effects of NAFTA

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  • John McLaren
  • Shushanik Hakobyan

Abstract

Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages. We look for effects of the agreement by industry and by geography, measuring each industry’s vulnerability to Mexican imports, and each locality’s dependance on vulnerable industries. We find evidence of both effects, dramatically lowering wage growth for blue-collar workers in the most affected industries and localities (even for service-sector workers in affected localities). These distributional effects are much larger than aggregate welfare effects estimated by other authors. In addition, we find strong evidence of anticipatory adjustment in places whose protection was expected to fall but had not yet fallen; this adjustment appears to have conferred an anticipatory rent to workers in those locations.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16535.

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Date of creation: Nov 2010
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Handle: RePEc:nbr:nberwo:16535

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References

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  1. Kyoji Fukao & Toshihiro Okubo & Robert M Stern, 2002. "An Econometric Analysis of Trade Diversion under NAFTA," Working Papers 491, Research Seminar in International Economics, University of Michigan.
  2. Erhan Artuç & Shubham Chaudhuri & John McLaren, 2007. "Delay and Dynamics in Labor Market Adjustment: Simulation Results," Koç University-TUSIAD Economic Research Forum Working Papers 0703, Koc University-TUSIAD Economic Research Forum.
  3. Harrison, Ann & McLaren, John & McMillan, Margaret S., 2010. "Recent findings on trade and inequality:," IFPRI discussion papers 1047, International Food Policy Research Institute (IFPRI).
  4. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters, in: Globalization and Poverty, pages 291-336 National Bureau of Economic Research, Inc.
  5. Hosios, Arthur J, 1990. "Factor Market Search and the Structure of Simple General Equilibrium Models," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 325-55, April.
  6. Gary Clyde Hufbauer & Jeffrey J. Schott, 2005. "NAFTA Revisited: Achievements and Challenges," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 332.
  7. Lorenzo Caliendo & Fernando Parro, 2012. "Estimates of the Trade and Welfare Effects of NAFTA," NBER Working Papers 18508, National Bureau of Economic Research, Inc.
  8. Anil Kumar, 2006. "Did NAFTA spur Texas exports?," Southwest Economy, Federal Reserve Bank of Dallas, issue Mar, pages 3-7.
  9. John Romalis, 2005. "NAFTA's and CUSFTA's Impact on International Trade," NBER Working Papers 11059, National Bureau of Economic Research, Inc.
  10. 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.
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Citations

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Cited by:
  1. 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.
  2. Jens Suedekum & Sebastian Findeisen & Wolfgang Dauth, 2012. "The Rise of the East and the Far East: German Labor Markets and Trade Integration," ERSA conference papers ersa12p883, European Regional Science Association.
  3. Coulson, N. Edward & Grieco, Paul L.E., 2013. "Mobility and mortgages: Evidence from the PSID," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 1-7.
  4. Rickman, Dan S. & Guettabi, Mouhcine, 2013. "The Great Recession and Nonmetropolitan America," MPRA Paper 44829, University Library of Munich, Germany.
  5. Partridge, Mark D. & Rickman, Dan & Olfert, M. Rose & Tan, Ying, 2013. "International Trade and Local Labor Markets: Are Foreign and Domestic Shocks Created Differently?," MPRA Paper 53407, University Library of Munich, Germany.
  6. Autor, David & Dorn, David & Hanson, Gordon H., 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," IZA Discussion Papers 7150, Institute for the Study of Labor (IZA).
  7. David H. Autor & David Dorn & Gordon H. Hanson & Jae Song, 2013. "Trade Adjustment: Worker Level Evidence," NBER Working Papers 19226, National Bureau of Economic Research, Inc.
  8. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "Untangling Trade and Technology: Evidence from Local Labor Markets," NBER Working Papers 18938, National Bureau of Economic Research, Inc.
  9. Zhang, Chuanchuan, 2012. "中国对外出口的区域劳动力市场效应
    [Local labor market effects of exporting in China]
    ," MPRA Paper 38615, University Library of Munich, Germany.
  10. Erhan Artuç & John McLaren, 2012. "Trade Policy and Wage Inequality: A Structural Analysis with Occupational and Sectoral Mobility," NBER Working Papers 18503, National Bureau of Economic Research, Inc.
  11. Ferdinando Monte, 2014. "Local Transmission of Trade Shocks," Working Papers 2014-001, Human Capital and Economic Opportunity Working Group.

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