Justin R. Pierce and Peter K. Schott say it was China, stupid: This paper links the sharp drop in US manufacturing employment after 2000 to a change in US trade policy that eliminated potential tariff increases on Chinese imports. Industries more exposed to the change experience greater employment loss, increased imports from China, and higher entry by US importers and foreign-owned Chinese exporters. At the plant level, shifts toward less labor-intensive production and exposure to the policy via input-output linkages also contribute to the decline in employment. Results are robust to other potential explanations of employment loss, and there is no similar reaction in the European Union, where policy did not change.
Paul Krugman (May 19, 2015): Trade and the Decline of US Manufacturing Employment"For the most part ... declining manufacturing employment isn’t due to trade. Again, that doesn’t mean that trade deficits are OK, or that trade hasn’t had other effects. But even if we’d had a highly protectionist world or in some other way had blocked the move into trade deficit, we’d still have seen most of the great decline in industrial jobs."
http://krugman.blogs.nytimes.com/2015/05/19/trade-and-the-decline-of-us-manufacturing-employment/ #China #US #manufacturing #trade
