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How Did Exchange Rates Affect Employment in US Cities?

Author

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  • Huang, Haifang

    (University of Alberta, Department of Economics)

  • Tang, Yao

    (Bowdoin College)

Abstract

We estimate the effects of real exchange rate movements on employment in US cities between 2003 and 2010. We explore the differences in the composition of local industries to construct city-specific changes in exchange rates and estimate their effects on local employment in manufacturing industries and in nonmanufacturing industries. Controlling for year and city fixed effects, we find that a depreciation of the US dollar increased local employment in the manufacturing industries, our proxy for the tradable sector. The depreciation also increased employment in the nonmanufacturing industries, the nontradable sector. Furthermore, the effects on nonmanufacturing employment were stronger in cities that had a higher fraction of manufacturing employment, indicating the exchange rate movements’ indirect effects through the manufacturing industries. We also consider an alternative definition of the tradable sector that is broadened to include five service industries. The findings are similar.

Suggested Citation

  • Huang, Haifang & Tang, Yao, 2013. "How Did Exchange Rates Affect Employment in US Cities?," Working Papers 2013-7, University of Alberta, Department of Economics.
    • Handle: RePEc:ris:albaec:2013_007
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    Cited by:

    1. Lina Cardona-Sosa & Fredy Gamboa-Estrada & Jesahel Higuera-Barajas, 2019. "Cheap employment: ¿Aumenta el empleo manufacturero con una depreciación real?," Borradores de Economia 1062, Banco de la Republica de Colombia.
    2. Wei Sun & Kuhelika De, 2019. "Real Exchange Rate, Monetary Policy, And The U.S. Economy: Evidence From A Favar Model," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 552-568, January.
    3. Peter H. Egger & Johannes Schwarzer & Anirudh Shingal, 2018. "Labour market effects of currency appreciation: The case of Switzerland," RSCAS Working Papers 2018/30, European University Institute.

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    More about this item

    Keywords

    exchange rate; employment; US cities;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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