The Employment Effects of Free Trade Agreements and Industry Trade Orientation

Abstract

Our earlier analyses have provided empirical evidence in support of the notion that increases in the levels of exports and import competition are positively and negatively related, respectively, to both production worker employment and wages and to the wages of nonproduction workers. Further, we reported considerable variation in the effects of trade when we allowed for variation across cohorts of trading partners that were categorized based on average income levels. We have also found evidence of a positive statistical relation between shifts in the sources of US imports from relatively high-wage countries to low-wage countries and job loss in US manufacturing industries. In this chapter, we look at two additional factors that may affect whether and to what extent domestic employment is affected by international trade.