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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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Author Info

  • Andrew B. Bernard

    () (Tuck School of Business)

  • J. Bradford Jensen

    () (General)

  • Peter K. Schott

    () (School of Management)

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 Yale School of Management in its series Yale School of Management Working Papers with number ysm299.

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Date of creation: 30 Aug 2002
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Handle: RePEc:ysm:somwrk:ysm299

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Web page: http://icf.som.yale.edu/
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Related research

Keywords: Heckscher-Ohlin; International Trade; Import Competition; Manufacturing Employment; Manufacturing Output;

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References

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  1. Richard B. Freeman, 1982. "Crime and the Labor Market," NBER Working Papers 1031, National Bureau of Economic Research, Inc.
  2. Andrew B. Bernard & J. Bradford Jensen, 2001. "Why Some Firms Export," NBER Working Papers 8349, National Bureau of Economic Research, Inc.
  3. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March.
  4. Bruce A. Blonigen & KaSaundra Tomlin, 1999. "Size and Growth of Japanese Plants in the United States," NBER Working Papers 7275, National Bureau of Economic Research, Inc.
  5. Bronwyn H. Hall, 1988. "The Relationship Between Firm Size and Firm Growth in the U.S. Manufacturing Sector," NBER Working Papers 1965, National Bureau of Economic Research, Inc.
  6. Davis, S.J. & Haltiwanger, J., 1989. "Gross Job Creation, Gross Job Destruction And Employment Reallocation," Working Papers e-89-33, Hoover Institution, Stanford University.
  7. J. Bradford Jensen & Andrew B Bernard, 2002. "The Deaths of Manufacturing Plants," Working Papers 02-15, Center for Economic Studies, U.S. Census Bureau.
  8. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
  9. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
  10. 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.
  11. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, October.
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Citations

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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. Deborah L. Swenson, 2004. "Overseas Assembly and Country Sourcing Choices," NBER Working Papers 10697, National Bureau of Economic Research, Inc.
  3. 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.
  4. Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2003. "Product Choice and Product Switching," CEP Discussion Papers dp0594, Centre for Economic Performance, LSE.
  5. Alejandro Cuñat & Marco Maffezzoli, . "Trade Integration and Growth," Working Papers 220, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  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. Lileeva, Alla, 2008. "Trade Liberalization and Productivity Dynamics: Evidence from Canada," Economic Analysis (EA) Research Paper Series 2008051e, Statistics Canada, Analytical Studies Branch.
  8. Johannes Van Biesebroeck, 2003. "Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants," NBER Working Papers 10020, National Bureau of Economic Research, Inc.
  9. 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.
  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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