Working Paper: NBER ID: w16535
Authors: John McLaren; Shushanik Hakobyan
Abstract: Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages. We look for effects of the agreement by industry and by geography, measuring each industry's vulnerability to Mexican imports, and each locality's dependance on vulnerable industries. We find evidence of both effects, dramatically lowering wage growth for blue-collar workers in the most affected industries and localities (even for service-sector workers in affected localities). These distributional effects are much larger than aggregate welfare effects estimated by other authors. In addition, we find strong evidence of anticipatory adjustment in places whose protection was expected to fall but had not yet fallen; this adjustment appears to have conferred an anticipatory rent to workers in those locations.
Keywords: NAFTA; Labor Market Effects; Wage Growth; Trade Policy
JEL Codes: F13; F16; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| NAFTA (F15) | wage growth for blue-collar workers (J39) |
| tariff reductions (F13) | wage growth for blue-collar workers in vulnerable localities (J39) |
| tariff reductions (F13) | wage growth in industries that lost protection (J39) |
| anticipatory effects of tariff reductions (F17) | wage increases (J38) |
| locations expecting tariff reductions (R32) | wage increases as workers left (J39) |
| NAFTA (F15) | distributional effects on workers (J65) |