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Title: Behind the Curve: Can Manufacturing Still Provide Inclusive Growth?

Citation Type: Book, Whole

Publication Year: 2023

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Abstract: The declines in the share of manufacturing employment in many countries have deprived workers and communities of potential opportunities to enjoy middle class lifestyles. Many have blamed flawed trade and industrial policies for these outcomes and claimed that different policies can restore manufacturing to its previous role in bringing prosperity to less educated workers and the towns they live in. Others have argued this would be futile because automation is the principal cause of the declines. This book challenges these simplistic views. It develops a general theory of change that integrates the effects of trade, technological change and spending patterns and shows that while national characteristics play a role, the manufacturing employment share declines result primarily from deeply rooted structural forces that are common to all countries and are unlikely to change. These forces lead the share of manufacturing employment to follow an inverted U- shaped curve as countries develop regardless of whether they run trade deficits or surpluses. The framework is also used to understand why the curve has shifted downwards over time. This has meant that countries that have emerged more recently are unable to reach the manufacturing employment shares attained by those that developed earlier. The book then offers a case study of US manufacturing employment over the postwar period that applies the theory and gives it more granularity. It shows the important role played by manufacturing in US growth, income distribution and regional convergence in the immediate postwar era. It then considers how after the 1970s changes in production technology and trade reduced the share of the employment in US manufacturing overall, especially the share of non-college workers. This contributed to the reduced inclusivity of US growth in numerous dimensions: These included the growing inequality of wages along the lines of skill, the declining shares of income that accrue to labor; the exclusion of males without a college education from most of the fruits of US growth and the divergence of income among US regions. The final section argues that industrial policy measures that are proposed in many countries to emphasize increased self-sufficiency, greening growth and the development of digital technologies are likely to continue the trend towards less inclusive growth. Accordingly, even if they achieve their objectives, these new policies need to be accompanied by measures beyond industrial policies that allow for a more equitable sharing of the fruits of technological advancement between people, places, and countries.

Url: http://cup.columbia.edu/book/behind-the-curve/9780881327472

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Authors: Lawrence, Robert Z.

Publisher: Peterson Institute for International Economics

Publisher Location: New York City, New York, US

Pages: 1-314

Volume:

Edition: 1

Data Collections: IPUMS USA, IPUMS CPS

Topics: Education, Gender, Labor Force and Occupational Structure, Work, Family, and Time

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