Comment on Sanjay Jain, Devesh Kapur, and Sharun W. Mukand

This paper asks why the recent wave of job movements to low-wage foreign countries has provoked such a strong political backlash in the United States, stronger than the movement of manufacturing jobs that has been observed ever since the United States has been a part of the world market. The authors’ answer is briefly this: even taking the case of an equal number of workers that lose their job in both industries, there are more persons potentially threatened in the service industry. In other words, even with an equal number of those actually hurt ex post, there are more “vulnerables” ex ante in the service sector. Why? Because their qualifications are of a “general purpose” type, while those of manufacturing workers are “specific purpose” qualifications. If shoe production is supposed to relocate to Mexico, say, than only the small group of shoe producing workers is “vulnerable.” If services are relocated to India, say, then the large group of IT workers is vulnerable and produces more unrest than the small group of shoe producers. This, as the authors claim, holds true even if the number of those eventually loosing their job is the same in both cases.