Working Paper: NBER ID: w18655
Authors: Justin R. Pierce; Peter K. Schott
Abstract: This paper finds a link between the sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade. These results are robust to other potential explanations of the employment loss, and we show that the U.S. employment trends differ from those in the EU, where there was no change in policy.
Keywords: Manufacturing Employment; Trade Policy; China; NTR Gap
JEL Codes: E0; F1; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| PNTR (F13) | decline in US manufacturing employment (F66) |
| higher NTR gaps (Q39) | larger declines in employment after PNTR (F66) |
| increase in imports from China (F69) | employment declines in manufacturing (O14) |
| PNTR (F13) | reduce employment growth from 2001 to 2002 (F66) |
| PNTR (F13) | greater employment losses in manufacturing sector (O14) |
| elimination of tariff increases (F13) | shaping firms' investment decisions (G31) |