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Trade liberalization, unemployment and adjustment: evidence from NAFTA using state level data

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  • John Francis
  • Yuqing Zheng

Abstract

This article specifies a supply and demand model of the labour market to examine the effects of North American Free Trade Agreement (NAFTA) on the US labour market. Regression results suggest that NAFTA decreased yearly unemployment growth by 4.4%. Equivalently, NAFTA brought a structural break to the US state level unemployment. The second finding is that the labour market began feeling the impact of NAFTA immediately after its implementation and the labour market has continued to feel its effects probably through 2001.

Suggested Citation

  • John Francis & Yuqing Zheng, 2011. "Trade liberalization, unemployment and adjustment: evidence from NAFTA using state level data," Applied Economics, Taylor & Francis Journals, vol. 43(13), pages 1657-1671.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:13:p:1657-1671
    DOI: 10.1080/00036840903194212
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    References listed on IDEAS

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    1. Baldwin, Robert E. & Christopher S. Magee, 2000. "Congressional Trade Votes: From NAFTA Approval to Fast Track Defeat," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa59, October.
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    Cited by:

    1. Lukas Mohler & Rolf Weder & Simone Wyss, 2018. "International trade and unemployment: towards an investigation of the Swiss case," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-12, December.

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