The Surprisingly Swift Decline of U.S. Manufacturing Employment

Pierce, Justin; Schott, Peter K.

doi:10.2139/ssrn.2390827

Cited by 45 publications

(102 citation statements)

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“…2 In prior research (Pierce and Schott (2016)), we show that goods more exposed to PNTR exhibit substantial relative increases in U.S. imports from China as well as the number of U.S. rms that import from China, the number of Chinese rms that export to the United States, and the number of U.S.-Chinese rm pairs engaged in a trading relationship. One interpretation of these outcomes is that they are the manifestation of investment in trading relationships that was unleashed by the elimination of cost uncertainty.…”

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confidence: 60%

Investment responses to trade liberalization: Evidence from U.S. industries and establishments

Pierce

Schott

2018

Journal of International Economics

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This paper examines the eect of a change in U.S. trade policy on the domestic investment of U.S. manufacturers. Using a dierence-in-dierences identication strategy, we nd that industries more exposed to reductions in import tari uncertainty exhibit relative declines in investment after the change in trade policy. Within industries, we nd that this relationship is concentrated among establishments with low initial levels of labor productivity, capital intensity and skill intensity. For plants with high initial levels of skill intensity, we nd that increased exposure is associated with a relative increase in investment. We also nd evidence that establishments' investment activity is smoother following the policy change.

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confidence: 60%

Investment responses to trade liberalization: Evidence from U.S. industries and establishments

Pierce

Schott

2018

Journal of International Economics

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“…() find that increased exposure to Chinese imports is negatively associated with the share of workers employed in the manufacturing sector. Similarly, Pierce and Schott () find that US manufacturing employment declined considerably as a result of the granting of permanent normal trade relations to China in 2000.…”

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confidence: 96%

Chinese export competition, declining exports and adjustments at the industry and regional level in Europe

Flückiger

Ludwig

2015

Canadian J of Economics

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We analyze how a set of 22 European countries is affected by increased Chinese export competition between 1995 and 2008. Employing product group-level data, we observe a reduction in the export volumes of European countries due to increased Chinese export competition. This deceleration in the export sector induces changes within the manufacturing industries, especially a decline in employment. When using more aggregated, regional-level data, our analysis shows that the industry sector as a whole declines, resulting in an increased unemployment rate. The importance of Chinese export competition for Europe is attributable to its high export intensity. JEL classification: F14, F16

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“…It is told in a large and growing literature on the job losses in US manufacturing from the China Trade Shock of the 2000s. 18 The main cause of the shock, according to this literature, was the granting of PNTR by the USA to China upon the latter's accession to the WTO in 2001 (Pierce and Schott 2012;Autor et al 2016a). How would the granting of PNTR have generated a trade shock capable of destroying in less than one decade 2.4 million American jobs, given that China had enjoyed Most Favored Nation (MFN) status in the US market (albeit conditional on an annual renewal) since 1980?…”

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confidence: 98%

“…How would the granting of PNTR have generated a trade shock capable of destroying in less than one decade 2.4 million American jobs, given that China had enjoyed Most Favored Nation (MFN) status in the US market (albeit conditional on an annual renewal) since 1980? The answer, according to Pierce and Schott (2012) is that, with the granting of PNTR, foreign and domestic firms producing for export to the USA no longer faced uncertainty about US tariff rates that would apply were MFN not renewed annually. In consequence:…”

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confidence: 99%

The costs and benefits of exchange rate protection in China

Riedel

2018

Asian-Pac Economic Lit

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From 2002 to 2011, China ran large surpluses in both the current and capital accounts of its balance of payments, which the People's Bank of China (PBOC) purchased and held at official foreign reserves to avoid nominal appreciation of the currency. Concurrently, with its massive purchases of foreign exchange, the PBOC compelled commercial banks to buy PBOC ‘sterilisation bonds’ and raised commercial bank reserve requirement ratios to avoid monetisation of its foreign exchange purchases and concomitant upward pressure on the price level (that is, real appreciation of the currency). Sterilising foreign exchange intervention, as China did for a decade, constitutes a violation of the implicit rules of a fixed exchange rate regime and as such can be seen as a mercantilist policy of manipulating the real exchange rate to gain, or avoid losing, international price competitiveness—what Corden (1981) termed ‘exchange rate protection’. This paper sets out the simple theory of the costs and benefits of exchange rate protection and provides back‐of‐the‐envelope estimates of their magnitude in China in the 2000s. It also explores the ‘other side of the story’, the decline in US manufacturing employment in the 2000s, which recent literature attributes to a ‘China Trade Shock’ that allegedly resulted from the US granting Permanent Normal Trade Relations (PNTR) to China in 2001. Here, it is argued that the so‐called China Trade Shock resulted from China's sterilised intervention policy, not the granting of PNTR. The implications of these competing hypotheses are considered in the conclusions.

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The Surprisingly Swift Decline of U.S. Manufacturing Employment

Cited by 45 publications

References 45 publications

Investment responses to trade liberalization: Evidence from U.S. industries and establishments

Investment responses to trade liberalization: Evidence from U.S. industries and establishments

Chinese export competition, declining exports and adjustments at the industry and regional level in Europe

The costs and benefits of exchange rate protection in China

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