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US Employment Deindustrialization: Insights from History and the International Experience

  • Robert Z. Lawrence

    ()

    (Harvard University and Peterson Institute for International Economics)

  • Lawrence Edwards

    ()

    (University of Cape Town)

International factors, such as the dramatic increase in imports from emerging-market economies, especially China, have been widely blamed for the decline in manufacturing employment in the United States over the past decade. The authors argue, however, that far more important in causing that decline has been the slow overall growth in US employment and powerful historical forces that have affected all advanced economies: a combination of rapid productivity growth and demand that is relatively unresponsive to income growth and lower prices. To be sure, US manufacturing employment can grow in the short run. The labor content of the US manufacturing trade deficit remains significant and a vigorous US and global economic recovery could boost US manufacturing employment. Over the long run, however, absent new product innovations, or a shift in consumer preferences, the basic forces leading to declining manufacturing employment are unlikely to abate.

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Paper provided by Peterson Institute for International Economics in its series Policy Briefs with number PB13-27.

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Date of creation: Oct 2013
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Handle: RePEc:iie:pbrief:pb13-27
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  1. Lawrence Edwards & Robert Z. Lawrence, 2013. "Rising Tide: Is Growth in Emerging Economies Good for the United States?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 5003, May.
  2. Pierce, Justin R. & Schott, Peter K., 2013. "The Surprisingly Swift Decline of U.S. Manufacturing Employment," Finance and Economics Discussion Series 2014-4, Board of Governors of the Federal Reserve System (U.S.).
  3. Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2009. "Estimating the Impact of Trade and Offshoring on American Workers Using the Current Population Surveys," Discussion Papers Series, Department of Economics, Tufts University 0742, Department of Economics, Tufts University.
  4. Timothy J. Kehoe & Kim J. Ruhl & Joseph B. Steinberg, 2013. "Global imbalances and structural change in the United States," Staff Report 489, Federal Reserve Bank of Minneapolis.
  5. Rodrik, Dani, 2011. "Unconditional Convergence," CEPR Discussion Papers 8631, C.E.P.R. Discussion Papers.
  6. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
  7. John McLaren & Shushanik Hakobyan, 2010. "Looking for Local Labor Market Effects of NAFTA," NBER Working Papers 16535, National Bureau of Economic Research, Inc.
  8. William D. Nordhaus, 2006. "Baumol's Diseases: A Macroeconomic Perspective," NBER Working Papers 12218, National Bureau of Economic Research, Inc.
  9. William Nordhaus, 2005. "The Sources of the Productivity Rebound and the Manufacturing Employment Puzzle," NBER Working Papers 11354, National Bureau of Economic Research, Inc.
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