IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/1041.html
   My bibliography  Save this paper

The Employment and Wage Effects of Import Competition in the United States

Author

Listed:
  • Gene M. Grossman

Abstract

A new methodology is developed to determine the extent to which import competition has been responsible for labor displacements and wage movements inspecific, allegedly trade-impacted sectors. The procedure involves the estimation of reduced-form wage and employment equations by sector. These equations are first derived from a more complete structural model of general equilibrium resource allocation.The proposed methodology is applied to nine manufacturing sectors in the United States. The sensitivity of employment to the domestic price of imports varies significantly across these nine sectors, whereas industry wages are relatively unaffected by movements in the price of the foreign good.Counterfactual simulations are performed under the hypothetical assumption of no intensification or abatement of import competition from 1967-1979. The differences between the paths of unemployment and wages so generated and the actual, historical paths are attributed to the effects of import competition.Imports have been responsible for the loss of a large number of jobs in only one industry, and for a significant loss in wages in two industries, among the nine studied.

Suggested Citation

  • Gene M. Grossman, 1982. "The Employment and Wage Effects of Import Competition in the United States," NBER Working Papers 1041, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1041
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w1041.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martin, John P & Evans, John M, 1981. "Notes on Measuring the Employment Displacement Effects of Trade by the Accounting Procedure," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 154-164, March.
    2. Hill, John K. & Mendez, JoseA., 1983. "Factor mobility and the general equilibrium model of production," Journal of International Economics, Elsevier, vol. 15(1-2), pages 19-26, August.
    3. Vincent Cable, 1977. "British Protectionism and Ldc Imports," Development Policy Review, Overseas Development Institute, vol. 0(2), pages 29-48, October.
    4. Linda Gard & James Riedel, 1980. "Safeguard protection of industry in developed countries : Assessment of the implications for developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(3), pages 471-492, September.
    5. Eric Verreydt & Jean Waelbroeck, 1982. "European Community Protection against Manufactured Imports from Developing Countries: A Case Study in the Political Economy of Protection," NBER Chapters, in: Import Competition and Response, pages 369-400, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Moser, Christoph & Urban, Dieter & di Mauro, Beatrice Weder, 2010. "International competitiveness, job creation and job destruction--An establishment-level study of German job flows," Journal of International Economics, Elsevier, vol. 80(2), pages 302-317, March.
    2. David Autor & David Dorn & Gordon Hanson, 2021. "On the Persistence of the China Shock," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 52(2 (Fall)), pages 381-476.
    3. Naoko Shinkai, 2000. "Does the Stopler-Samuelson Theorem Explain the Movement in Wages? The Linkage Between Trade and Wages in Latin American Countries," Research Department Publications 4237, Inter-American Development Bank, Research Department.
    4. Rodolfo Helg & Riccardo Faini & Anna M. Falzoni & Marzio Galeotti & Alessandro Turrini, 2001. "Importing Jobs And Exporting Firms? On The Wage And Employment Implications Of Italy’S Trade And Foreign Direct Investment Flows," International Trade 0103001, University Library of Munich, Germany.
    5. Grossman, Gene M., 1986. "Imports as a cause of injury: The case of the U.S. steel industry," Journal of International Economics, Elsevier, vol. 20(3-4), pages 201-223, May.
    6. Stefano Federico, 2014. "Industry Dynamics and Competition from Low-Wage Countries: Evidence on Italy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(3), pages 389-410, June.
    7. John M. Abowd & Thomas Lemieux, 1991. "The Effects of International Competition on Collective Bargaining Outcomes: A Comparison of the United States and Canada," NBER Chapters, in: Immigration, Trade, and the Labor Market, pages 343-367, National Bureau of Economic Research, Inc.
    8. 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.
    9. Christis Tombazos, 1999. "The role of imports in expanding the demand gap between skilled and unskilled labour in the US," Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 509-516.
    10. Hajnalka Tarjani, 2005. "Estimating some labour market implications of skill biased technology change and imports in Hungary," CERS-IE WORKING PAPERS 0508, Institute of Economics, Centre for Economic and Regional Studies.
    11. Robert E. Baldwin, 1995. "The Effects of Trade and Foreign Direct Investment on Employment and Relative Wages," OECD Jobs Study Working Papers 4, OECD Publishing.
    12. Agnes Kügler & Klaus Friesenbichler & Cornelius Hirsch, 2024. "Labour Market Effects of Trade in a Small Open Economy," REGION, European Regional Science Association, vol. 11, pages 1-26.
    13. Antonia Lòpez-Villavicencio & Luis Antonio Reyes Ortiz, 2018. "Is globalisation taking away jobs? An empirical assessment for advanced economies," CEPN Working Papers halshs-01895223, HAL.
    14. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
    15. Naoko Shinkai, 2000. "¿Explica el teorema Stopler-Samuelson el desplazamiento de los salarios? El vínculo entre el comercio internacional y los salarios en países latinoamericanos," Research Department Publications 4238, Inter-American Development Bank, Research Department.
    16. Roberto Coronado & Eduardo Saucedo, 2019. "Drug-related violence in Mexico and its effects on employment," Empirical Economics, Springer, vol. 57(2), pages 653-681, August.
    17. Oscarsson, Eva, 2000. "Trade, Employment and Wages in Sweden 1975-93," Research Papers in Economics 2000:8, Stockholm University, Department of Economics.
    18. Antonia Lòpez-Villavicencio & Luis Antonio Reyes Ortiz, 2018. "Is globalisation taking away jobs? An empirical assessment for advanced economies," Working Papers halshs-01895223, HAL.
    19. Ann Harrison & Ana Revenga, 1995. "The Effects of Trade Policy Reform: What Do We Really Know?," NBER Working Papers 5225, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eric Verreydt & Jean Waelbroeck, 1982. "European Community Protection against Manufactured Imports from Developing Countries: A Case Study in the Political Economy of Protection," NBER Chapters, in: Import Competition and Response, pages 369-400, National Bureau of Economic Research, Inc.
    2. Helen Hughes & Anne O. Krueger, 1984. "Effects of Protection in Developed Countries on Developing Countries' Exports of Manufactures," NBER Chapters, in: The Structure and Evolution of Recent US Trade Policy, pages 389-424, National Bureau of Economic Research, Inc.
    3. R. E. Baldwin & G. G. Cain, "undated". "Shifts in U.S. Relative Wages: The Role of Trade, Technology, and Factor Endowments," Institute for Research on Poverty Discussion Papers 1132-97, University of Wisconsin Institute for Research on Poverty.
    4. Denis Delgay-Troïse, 1993. "Distorsions sur les marchés des facteurs et évolution des spécialisations internationales," Revue Économique, Programme National Persée, vol. 44(1), pages 51-70.
    5. R. Antonietti & D. Antonioli, 2007. "Conditional Leptokurtosis in Energy Prices: Multivariate Evidence from Futures Markets," Working Papers 594, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Donges, Juergen B., 1989. "Ist das Freihandelspostulat noch zeitgemäß?," Kiel Working Papers 355, Kiel Institute for the World Economy (IfW Kiel).
    7. repec:ilo:ilowps:248521 is not listed on IDEAS
    8. Carl Hamilton & Mordechai Kreinin, 1980. "The structural pattern of LDCs’ trade in manufactures with individual and groups of DCs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 264-279, June.
    9. Kandilov Ivan T, 2010. "How Import Competition Affects Displaced Workers in the U.S," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-39, June.
    10. Robert E. Baldwin, 1995. "The Effects of Trade and Foreign Direct Investment on Employment and Relative Wages," NBER Working Papers 5037, National Bureau of Economic Research, Inc.
    11. Edward Ray, 1989. "The impact of rent seeking activity on U.S. preferential trade and World debt," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 125(3), pages 619-638, September.
    12. Rajesh Raj S.N. & Subash Sasidharan, 2015. "Impact of Foreign Trade on Employment and Wages in Indian Manufacturing," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 16(2), pages 209-232, September.
    13. Guncavdi, Oner & Kucukcifci, Suat, 2008. "Openness to Trade and Structural Changes in the Sources of Economic Growth and Labour Demand in Turkey," MPRA Paper 9624, University Library of Munich, Germany.
    14. Meckl, Jürgen, 1989. "Investment and sector-specific capital: A dynamic approach to incomplete factor mobility," Discussion Papers, Series II 95, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    15. Wolter, Frank, 1980. "The Impact of manufactured imports from developing countries in the Federal Republic of Germany," Kiel Working Papers 99, Kiel Institute for the World Economy (IfW Kiel).
    16. Schuknecht, Ludger, 1989. "The political economy of EC protectionism: National protectionism based on art. 115, treaty of Rome," Discussion Papers, Series II 81, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    17. Rossana Patrón, 2000. "Effects from trade with heterogeneous workers and minimum wages: numerical exercises," Documentos de Trabajo (working papers) 1700, Department of Economics - dECON.
    18. Hayrettin KAPLAN & Feridun TUR, 2013. "İhracatta Pazar Kompozisyonundaki Değişimin Dış Talep Göstergesine Etkisi," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 24(86), pages 29-53.
    19. Vashisht, Pankaj, 2016. "Creating manufacturing jobs in India: Has openness to trade really helped?," Journal of Asian Economics, Elsevier, vol. 42(C), pages 53-64.
    20. Guncavdi Oner & Kucukcifci Suat, 2005. "Financial Reforms and the Decomposition of Economic Growth: An Investigation of the Changing Role of the Financial Sector in Turkey," Review of Middle East Economics and Finance, De Gruyter, vol. 3(1), pages 61-84, April.
    21. Agenor, Pierre-Richard & Santaella, Julio A., 1998. "Efficiency wages, disinflation and labor mobility," Journal of Economic Dynamics and Control, Elsevier, vol. 22(2), pages 267-291, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1041. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.