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The Impact of Real Exchange Rate Shocks on Manufacturing Workers: An Autopsy from the MORG

Author

Listed:
  • Douglas L. Campbell

    () (New Economic School (NES))

  • Lester Lusher

    () (UC Davis)

Abstract

We study the impact of large real exchange rate shocks on workers in sectors initially more exposed to international trade using the Current Population Survey’s (CPS) Merged Outgoing Rotation Group (MORG) from 1979 to 2010 combined with new annual measures of imported inputs, a proxy for offshoring. We find that in periods when US relative prices are high, and imports surge relative to exports, workers in sectors with greater initial exposure to international trade were more likely to be unemployed or exit the labor force a year later, but did not experience significant declines in wages conditional on being employed. Contrary to the usual narrative, we find negative wage effects for higher-wage, but not lower-wage workers, particularly for those who are lesseducated.

Suggested Citation

  • Douglas L. Campbell & Lester Lusher, 2018. "The Impact of Real Exchange Rate Shocks on Manufacturing Workers: An Autopsy from the MORG," Working Papers w0223, Center for Economic and Financial Research (CEFIR).
  • Handle: RePEc:cfr:cefirw:w0223
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Ben Bernanke, in Denial? "When Growth is Not Enough"
      by Doug Campbell in Douglas L. Campbell on 2017-07-09 13:14:00
    2. Is US Manufacturing Really Great Again?
      by Doug Campbell in Douglas L. Campbell on 2017-05-09 23:36:00

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    More about this item

    Keywords

    Real Exchange Rates; Labor Market Impact of Trade Shocks; Inequality; American Manufacturing;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • N60 - Economic History - - Manufacturing and Construction - - - General, International, or Comparative
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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