Working Paper: NBER ID: w30048
Authors: Marius Faber; Andrs P. Sarto; Marco Tabellini
Abstract: Migration is a key mechanism through which local labor markets adjust to economic shocks. In this paper, we analyze the migration response of American workers to two of the most important shocks that hit US manufacturing since the 1990s: Chinese import competition and the introduction of industrial robots. Exploiting plausibly exogenous variation in exposure across US local labor markets over time, we establish a new fact. Even though both shocks drastically reduced employment in the manufacturing sector, only robots led to a sizable decline in population size. We provide evidence that negative employment spillovers outside manufacturing, caused by robots but not by Chinese imports, can explain the different migration responses. We interpret our findings through the lens of a model that highlights two mechanisms: the cost savings that each shock provides and the degree of complementarity between directly and indirectly exposed industries.
Keywords: migration; robots; Chinese imports; local labor markets; economic shocks
JEL Codes: J21; J23; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Industrial robots (L63) | Decline in population size (J11) |
| Industrial robots (L63) | Negative employment spillovers into non-manufacturing sectors (F66) |
| Negative employment spillovers into non-manufacturing sectors (F66) | Reduced inmigration (J69) |
| Chinese imports (F14) | Negative impact on manufacturing employment (F66) |
| Chinese imports (F14) | No significant effect on population size or migration patterns (J11) |
| Industrial robots (L63) | Larger migration elasticity for high-skilled individuals (J61) |
| Industrial robots (L63) | Smaller migration elasticity for low-skilled workers (J69) |