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Looking for Local Labor Market Effects of NAFTA

  • John McLaren
  • Shushanik Hakobyan

Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages. We look for effects of the agreement by industry and by geography, measuring each industry's vulnerability to Mexican imports, and each locality's dependance on vulnerable industries. We find evidence of both effects, dramatically lowering wage growth for blue-collar workers in the most affected industries and localities (even for service-sector workers in affected localities). These distributional effects are much larger than aggregate welfare effects estimated by other authors. In addition, we find strong evidence of anticipatory adjustment in places whose protection was expected to fall but had not yet fallen; this adjustment appears to have conferred an anticipatory rent to workers in those locations.

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File URL: http://www.nber.org/papers/w16535.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16535.

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Date of creation: Nov 2010
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Handle: RePEc:nbr:nberwo:16535
Note: ITI
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  1. Anil Kumar, 2006. "Did NAFTA spur Texas exports?," Southwest Economy, Federal Reserve Bank of Dallas, issue Mar, pages 3-7.
  2. Artuç, Erhan & Chaudhuri, Shubham & McLaren, John, 2008. "Delay and dynamics in labor market adjustment: Simulation results," Journal of International Economics, Elsevier, vol. 75(1), pages 1-13, May.
  3. Mary E. Burfisher & Sherman Robinson & Karen Thierfelder, 2001. "The Impact of NAFTA on the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 125-144, Winter.
  4. Kyoji Fukao & Toshihiro Okubo & Robert M Stern, 2002. "An Econometric Analysis of Trade Diversion under NAFTA," Working Papers 491, Research Seminar in International Economics, University of Michigan.
  5. Petia Topalova, 2005. "Trade Liberalization, Poverty And Inequality: Evidence From Indian Districts," Working Papers id:222, eSocialSciences.
  6. Lorenzo Caliendo & Fernando Parro, 2012. "Estimates of the Trade and Welfare Effects of NAFTA," NBER Working Papers 18508, National Bureau of Economic Research, Inc.
  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. Ann Harrison & John McLaren & Margaret S. McMillan, 2010. "Recent Findings on Trade and Inequality," NBER Working Papers 16425, National Bureau of Economic Research, Inc.
  9. Gary Clyde Hufbauer & Jeffrey J. Schott, 2005. "NAFTA Revisited: Achievements and Challenges," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 332.
  10. John Romalis, 2005. "NAFTA's and CUSFTA's Impact on International Trade," NBER Working Papers 11059, National Bureau of Economic Research, Inc.
  11. Hosios, Arthur J, 1990. "Factor Market Search and the Structure of Simple General Equilibrium Models," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 325-55, April.
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