Working Paper: NBER ID: w9170
Authors: Andrew B. Bernard; J. Bradford Jensen; Peter K. Schott
Abstract: We examine the relationship between import competition from low wage countries and the reallocation of US manufacturing from 1977 to 1997. Both employment and output growth are slower for plants that face higher levels of low wage import competition in their industry. As a result, US manufacturing is reallocated over time towards industries that are more capital and skill intensive. Differential growth is driven by a combination of increased plant failure rates and slower growth of surviving plants. Within industries, low wage import competition has the strongest effects on the least capital and skill intensive plants. Surviving plants that switch industries move into more capital and skill intensive sectors when they face low wage competition.
Keywords: No keywords provided
JEL Codes: F11; F14; L25; L60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased low wage competition (F66) | Slower employment growth (J69) |
| Higher capital and skill intensity (J24) | Mitigation of negative effects of low wage competition (F66) |
| Low wage competition (F66) | Switch to more capital and skill intensive sectors (O14) |