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International Trade and Local Labor Markets: Are Foreign and Domestic Shocks Created Differently?

  • Partridge, Mark D.
  • Rickman, Dan
  • Olfert, M. Rose
  • Tan, Ying

Despite the attention given to international trade in discussion and analysis of the economic struggles of many regions across the U.S., it is unclear whether international trade shocks impact local economies more and differently than shocks originating from within the domestic economy, thus requiring special policy attention. Therefore, using U.S. county-level data for 1990-2010, this study carefully constructs demand shocks to local economies, isolating international import and export impacts to assess whether trade shocks have different effects from domestic demand shocks. We examine a variety of economic indicators including population growth, employment rates, wage rates and poverty rates. The results suggest that international trade shocks have some different effects than overall domestic shocks, though public perception of trade appears to be more negative than reality. We also find that domestic shocks dominate international trade shocks in explaining variation in regional labor market outcomes over the entire period.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 53407.

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Date of creation: 29 Jan 2013
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Handle: RePEc:pra:mprapa:53407
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  1. Ivan T. Kandilov, 2009. "The Effects Of Trade With Developing Countries On The Regional Demand For Skill In The U.S.: Evidence From County Data," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 459-482.
  2. John McLaren & Shushanik Hakobyan, 2010. "Looking for Local Labor Market Effects of NAFTA," NBER Working Papers 16535, National Bureau of Economic Research, Inc.
  3. Guy Michaels, 2008. "The Effect of Trade on the Demand for Skill: Evidence from the Interstate Highway System," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 683-701, November.
  4. Lawrence Edwards & Robert Lawrence, 2010. "US Trade and Wages: The Misleading Implications of Conventional Trade Theory," Working Papers 180, Economic Research Southern Africa.
  5. Hartmut Egger & Udo Kreickemeier, 2009. "Firm Heterogeneity And The Labor Market Effects Of Trade Liberalization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 187-216, 02.
  6. Robin Leichenko & Julie Silva, 2003. "International Trade, Employment, and Earnings: Evidence from U.S. Rural Counties," Working Papers 03-12, Center for Economic Studies, U.S. Census Bureau.
  7. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Mark D. Partridge & Dan S. Rickman & Kamar Ali, 2008. "Recent Immigration and Economic Outcomes in Rural America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1326-1333.
  9. Partridge, Mark D. & Rickman, Dan S. & Ali, Kamar & Olfert, M. Rose, 2009. "Agglomeration spillovers and wage and housing cost gradients across the urban hierarchy," Journal of International Economics, Elsevier, vol. 78(1), pages 126-140, June.
  10. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The Geography of Trade and Technology Shocks in the United States," American Economic Review, American Economic Association, vol. 103(3), pages 220-25, May.
  11. Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 74(1), pages 70-93, January.
  12. Mark D. Partridge & Dan S. Rickman & Kamar Ali & M. Rose Olfert, 2008. "Lost in space: population growth in the American hinterlands and small cities," Journal of Economic Geography, Oxford University Press, vol. 8(6), pages 727-757, November.
  13. John Bound & Harry J. Holzer, 1996. "Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s," NBER Working Papers 5685, National Bureau of Economic Research, Inc.
  14. Neumann, George R & Topel, Robert H, 1991. "Employment Risk, Diversification, and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1341-65, November.
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