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Using Panel Data to Estimate the Effect of the North American Free Trade Agreement on Employment and Wages at the State Level

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  • Mark Gius

Abstract

I determine the effect of NAFTA on employment and wages in the United States. I use a panel-data set of 50 states for 1980-2000, and a two-stage least squares, fixed effects model. I estimate equations for employment and wages. Empirical results indicate that NAFTA had a negative effect on employment and a positive effect on wages. Chow Test results suggest that there is a break in both the employment and wage relationships in 1994, the year NAFTA became effective.

Suggested Citation

  • Mark Gius, 2006. "Using Panel Data to Estimate the Effect of the North American Free Trade Agreement on Employment and Wages at the State Level," New York Economic Review, New York State Economics Association (NYSEA), vol. 37(1), pages 20-31.
  • Handle: RePEc:nye:nyervw:v:37:y:2006:i:1:p:20-31
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    References listed on IDEAS

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    1. Michael W. Klein & Scott Schuh & Robert K. Triest, 2003. "Job Creation, Job Destruction, and International Competition," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number jcjd, November.
    2. Willem Thorbecke & Christian Eigen-Zucchi, 2002. "Did NAFTA Cause a "Giant Sucking Sound"?," Journal of Labor Research, Transaction Publishers, vol. 23(4), pages 647-658, October.
    3. repec:mes:challe:v:38:y:1995:i:2:p:56-62 is not listed on IDEAS
    4. Michael W. Klein & Scott Schuh & Robert K. Triest, 2002. "Job creation, job destruction, and international competition: a literature review," Working Papers 02-7, Federal Reserve Bank of Boston.
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