The Surprisingly Swift Decline of US Manufacturing Employment
American Economic Review
vol. 106,
no. 7, July 2016
(pp. 1632-62)
Abstract
This paper links the sharp drop in US manufacturing employment after 2000 to a change in US trade policy that eliminated potential tariff increases on Chinese imports. Industries more exposed to the change experience greater employment loss, increased imports from China, and higher entry by US importers and foreign-owned Chinese exporters. At the plant level, shifts toward less labor-intensive production and exposure to the policy via input-output linkages also contribute to the decline in employment. Results are robust to other potential explanations of employment loss, and there is no similar reaction in the European Union, where policy did not change.Citation
Pierce, Justin R., and Peter K. Schott. 2016. "The Surprisingly Swift Decline of US Manufacturing Employment." American Economic Review, 106 (7): 1632-62. DOI: 10.1257/aer.20131578Additional Materials
JEL Classification
- D72 Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- F13 Trade Policy; International Trade Organizations
- F16 Trade and Labor Market Interactions
- L24 Contracting Out; Joint Ventures; Technology Licensing
- L60 Industry Studies: Manufacturing: General
- P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid