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Trade Costs and Job Flows: Evidence from Establishment-Level Data

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Abstract

We present evidence of the impact of input and output trade liberalization on establishment-level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or output trade costs causes job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. We also show that input trade liberalization has larger effects on establishment-level job flows than output trade liberalization.

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  • José Luis Groizard & Priya Ranjan & José Antonio Rodríguez-López, 2012. "Trade Costs and Job Flows: Evidence from Establishment-Level Data," DEA Working Papers 48, Universitat de les Illes Balears, Departament d'Economía Aplicada, revised Mar 2014.
    • Handle: RePEc:ubi:deawps:48
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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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