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


  • Gene M. Grossman


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

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    References listed on IDEAS

    1. 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.
    2. 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.
    3. 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.
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    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. 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.
    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. 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.
    5. 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, EconWPA.
    6. 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.
    7. 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.
    8. Oscarsson, Eva, 2000. "Trade, Employment and Wages in Sweden 1975-93," Research Papers in Economics 2000:8, Stockholm University, Department of Economics.
    9. 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.
    10. 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.
    11. 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.

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