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International Trade and Local Labor Markets: Are Foreign and Domestic Shocks Created Differently?

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  • Partridge, Mark D.
  • Rickman, Dan
  • Olfert, M. Rose
  • Tan, Ying

Abstract

Despite the attention given to international trade in discussion and analysis of the economic struggles of many regions across the U.S., it is unclear whether international trade shocks impact local economies more and differently than shocks originating from within the domestic economy, thus requiring special policy attention. Therefore, using U.S. county-level data for 1990-2010, this study carefully constructs demand shocks to local economies, isolating international import and export impacts to assess whether trade shocks have different effects from domestic demand shocks. We examine a variety of economic indicators including population growth, employment rates, wage rates and poverty rates. The results suggest that international trade shocks have some different effects than overall domestic shocks, though public perception of trade appears to be more negative than reality. We also find that domestic shocks dominate international trade shocks in explaining variation in regional labor market outcomes over the entire period.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 53407.

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Date of creation: 29 Jan 2013
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Handle: RePEc:pra:mprapa:53407

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Keywords: Regional Labor Markets; International Trade; Local Labor Markets;

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References

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  1. John McLaren & Shushanik Hakobyan, 2010. "Looking for Local Labor Market Effects of NAFTA," NBER Working Papers 16535, National Bureau of Economic Research, Inc.
  2. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The Geography of Trade and Technology Shocks in the United States," NBER Working Papers 18940, National Bureau of Economic Research, Inc.
  3. Michaels, Guy, 2007. "The Effect of Trade on the Demand for Skill - Evidence from the Interstate Highway System," CEPR Discussion Papers 6056, C.E.P.R. Discussion Papers.
  4. Robin Leichenko & Julie Silva, 2003. "International Trade, Employment, and Earnings: Evidence from U.S. Rural Counties," Working Papers 03-12, Center for Economic Studies, U.S. Census Bureau.
  5. Daniel Chiquiar, 2004. "Globalization, Regional Wage Differentials and the Stolper-Samuelson Theorem: Evidence from México," Working Papers 2004-06, Banco de México.
  6. Lawrence Edwards & Robert Z. Lawrence, 2010. "US Trade and Wages: The Misleading Implications of Conventional Trade Theory," NBER Working Papers 16106, National Bureau of Economic Research, Inc.
  7. Neumann, George R & Topel, Robert H, 1991. "Employment Risk, Diversification, and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1341-65, November.
  8. Ivan T. Kandilov, 2009. "The Effects Of Trade With Developing Countries On The Regional Demand For Skill In The U.S.: Evidence From County Data," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 459-482.
  9. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Hartmut Egger & Udo Kreickemeier, 2007. "Firm Heterogeneity and the Labour Market Effects of Trade Liberalisation," CESifo Working Paper Series 2000, CESifo Group Munich.
  11. John Bound & Harry J. Holzer, 1996. "Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s," NBER Working Papers 5685, National Bureau of Economic Research, Inc.
  12. Mark D. Partridge & Dan S. Rickman & Kamar Ali, 2008. "Recent Immigration and Economic Outcomes in Rural America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1326-1333.
  13. Partridge, Mark D. & Rickman, Dan S. & Ali, Kamar & Olfert, M. Rose, 2009. "Agglomeration spillovers and wage and housing cost gradients across the urban hierarchy," Journal of International Economics, Elsevier, vol. 78(1), pages 126-140, June.
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