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How Import Competition Affects Displaced Workers in the U.S

Listed author(s):
  • Kandilov Ivan T

    ()

    (North Carolina State University at Raleigh)

I use the Displaced Worker Survey and bilateral trade data to assess the impact of import competition from low-wage countries on displaced workers' unemployment duration and re-employment wages. While low-wage imports have almost no effect on unemployment duration for workers displaced from an industry with the average length of the quality ladder, I find that a ten percentage point increase in low-wage imports leads to a 5.6 week longer jobless spell duration for workers displaced from an industry with a short quality ladder. Similarly, a ten percentage point increase in low-wage imports leads to a 7.2 percent decline in re-employment wages for workers displaced from an average ladder industry, but it leads to an 11.3 percent decline in re-employment wages for workers displaced from a short ladder industry. I show evidence that greater low-wage imports raise the likelihood of sectoral relocation upon re-employment, leading to loss of sector specific human capital.

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Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 10 (2010)
Issue (Month): 1 (June)
Pages: 1-39

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Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:49
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