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Trade Costs and Job Flows: Evidence from Establishment-Level Data

  • Jose Luis Groizard


    (Department of Economics, Universitat de les Illes Balears)

  • Priya Ranjan


    (Department of Economics, University of California-Irvine)

  • Jose Antonio Rodriguez-Lopez


    (Department of Economics, University of California-Irvine)

We present evidence of the impact of input and output trade liberalization on establishment-level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or output trade costs causes job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. We also show that input trade liberalization has larger effects on establishment-level job flows than output trade liberalization.

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Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 111208.

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Length: 34 pages
Date of creation: Feb 2012
Date of revision: Oct 2013
Handle: RePEc:irv:wpaper:111208
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  1. Jose Luis Groizard & Priya Ranjan & Jose Antonio Rodriguez-Lopez, 2013. "Offshoring, Exporting, and Jobs," Working Papers 121312, University of California-Irvine, Department of Economics.
  2. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," NBER Working Papers 12167, National Bureau of Economic Research, Inc.
  3. Klein, Michael W. & Schuh, Scott & Triest, Robert K., 2003. "Job creation, job destruction, and the real exchange rate," Journal of International Economics, Elsevier, vol. 59(2), pages 239-265, March.
  4. Pinelopi Goldberg & Amit Khandelwal & Nina Pavcnik & Petia Topalova, 2009. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," Working Papers 1179, Princeton University, Department of Economics, Center for Economic Policy Studies..
  5. Costas Arkolakis, 2008. "Market Penetration Costs and the New Consumers Margin in International Trade," NBER Working Papers 14214, National Bureau of Economic Research, Inc.
  6. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, June.
  7. 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.
  8. Ghironi, Fabio & Melitz, Marc J, 2004. "International Trade and Macroeconomic Dynamics with Heteroegenous Firms," CEPR Discussion Papers 4595, C.E.P.R. Discussion Papers.
  9. Steven J. Davis & John Haltiwanger & Ron S. Jarmin & C. J. Krizan & Javier Miranda & Alfred Nucci & Kristin Sandusky, 2007. "Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes," NBER Working Papers 13226, National Bureau of Economic Research, Inc.
  10. Petia Topalova, 2004. "Trade Liberalization and Firm Productivity: The Case of India," IMF Working Papers 04/28, International Monetary Fund.
  11. Costas Arkolakis & Marc-Andreas Muendler, 2010. "The Extensive Margin of Exporting Products: A Firm-level Analysis," NBER Working Papers 16641, National Bureau of Economic Research, Inc.
  12. David Neumark & Junfu Zhang & Brandon Wall, 2006. "Employment Dynamics and Business Relocation: New Evidence from the National Establishment Time Series," Working Papers 050624, University of California-Irvine, Department of Economics.
  13. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
  14. Ebenstein, Avraham & Harrison, Ann & McMillan, Margaret & Phillips, Shannon, 2011. "Estimating the impact of trade and offshoring on American workers using the current population surveys," Policy Research Working Paper Series 5750, The World Bank.
  15. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  16. David Neumark & Brandon Wall & Junfu Zhang, 2011. "Do Small Businesses Create More Jobs? New Evidence for the United States from the National Establishment Time Series," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 16-29, August.
  17. repec:bla:restud:v:58:y:1991:i:2:p:277-97 is not listed on IDEAS
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