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Survival of the Best Fit: Competition from Low Wage Countries and the (Uneven) Growth of US Manufacturing Plants

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  • Andrew B. Bernard
  • J. Bradford Jensen
  • Peter K. Schott

Abstract

We examine the relationship between import competition from low wage countries and the reallocation of US manufacturing from 1977 to 1997. Both employment and output growth are slower for plants that face higher levels of low wage import competition in their industry. As a result, US manufacturing is reallocated over time towards industries that are more capital and skill intensive. Differential growth is driven by a combination of increased plant failure rates and slower growth of surviving plants. Within industries, low wage import competition has the strongest effects on the least capital and skill intensive plants. Surviving plants that switch industries move into more capital and skill intensive sectors when they face low wage competition.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9170.

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Date of creation: Sep 2002
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Publication status: published as Bernard, Andrew, J. Bradford Jensen and Peter K. Schott. 2006. Survival of the Best Fit: Exposure to Low-Wage Countries and the (Uneven) Growth of US Manufacturing Plants. Journal of International Economics 68:219-237
Handle: RePEc:nbr:nberwo:9170

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  1. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, octubre-d.
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  5. J. Bradford Jensen & Andrew B Bernard, 2002. "The Deaths of Manufacturing Plants," Working Papers 02-15, Center for Economic Studies, U.S. Census Bureau.
  6. Steve J. Davis & John Haltiwanger, 1991. "Gross job creation, gross job destruction and employment reallocation," Working Paper Series, Macroeconomic Issues 91-5, Federal Reserve Bank of Chicago.
  7. Andrew B. Bernard & J. Bradford Jensen, 2001. "Why Some Firms Export," NBER Working Papers 8349, National Bureau of Economic Research, Inc.
  8. Richard B. Freeman & Lawrence F. Katz, 1991. "Industrial Wage and Employment Determination in an Open Economy," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 235-259 National Bureau of Economic Research, Inc.
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Cited by:
  1. J. Bradford Jensen & Lori G. Kletzer, 2005. "Tradable Services: Understanding the Scope and Impact of Services Outsourcing," Working Paper Series WP05-9, Peterson Institute for International Economics.
  2. Van Biesebroeck, Johannes, 2005. "Exporting raises productivity in sub-Saharan African manufacturing firms," Journal of International Economics, Elsevier, vol. 67(2), pages 373-391, December.
  3. Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2003. "Product Choice and Product Switching," CEP Discussion Papers dp0594, Centre for Economic Performance, LSE.
  4. Bruce A. Blonigen & Lindsay Oldenski & Nicholas Sly, 2011. "Separating the Opposing Effects of Bilateral Tax Treaties," NBER Working Papers 17480, National Bureau of Economic Research, Inc.
  5. Alla Lileeva, 2008. "Trade liberalization and productivity dynamics: evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 41(2), pages 360-390, May.
  6. Gu, Wulong & Sawchuk, Gary, 2006. "Comment les regions du Canada s'adaptent-elles a un marche nord-americain plus grand et plus integre?," Serie de documents de recherche sur l'analyse economique (AE) 2006039f, Statistics Canada, Direction des etudes analytiques.
  7. Gu, Wulong & Sawchuk, Gary, 2006. "How Are Canadian Regions Adjusting to a Larger and More Integrated North American Market?," Economic Analysis (EA) Research Paper Series 2006039e, Statistics Canada, Analytical Studies Branch.
  8. Nan Nan Lundin, 2004. "Has Import Disciplined Swedish Manufacturing Firms in the 1990s?," Journal of Industry, Competition and Trade, Springer, vol. 4(2), pages 109-133, 06.
  9. Lileeva, Alla, 2008. "Dynamique de la liberalisation des echanges et de la productivite : un eclairage canadien," Serie de documents de recherche sur l'analyse economique (AE) 2008051f, Statistics Canada, Direction des etudes analytiques.
  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.
  11. Swenson, Deborah L., 2005. "Overseas assembly and country sourcing choices," Journal of International Economics, Elsevier, vol. 66(1), pages 107-130, May.
  12. Alejandro Cuñat & Marco Maffezzoli, . "Trade Integration and Growth," Working Papers 220, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

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