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Title: Trade Displacement Multipliers: Theory and Evidence Using the U.S. Trade Adjustment Assistance

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: Administrative data from the U.S. Trade Adjustment Assistance (TAA) program reveal that, across locations, one extra TAA trade-displaced worker is associated with overall employment falling by about two workers. This finding is robust to local Bartik-style import penetration measures, suggesting a role for within-industry heterogeneity. A Ricardian trade model with endogenous variable markups can rationalize such a trade displacement multiplier. In the medium run following a trade liberalization, employment and earnings collapse in the less productive locations because of both higher trade-induced job losses and lower job creation, as in the data. Earnings inequality increases and prompts transitional transfers towards decaying locations, even as aggregate employment rises amidst muted geographic mobility.

Url: https://conference.nber.org/conferences/2017/TLMf17/Kondo_Trade_TAA.pdf

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Authors: Kondo, Illenin, O

Publisher: University of Notre Dame

Data Collections: IPUMS USA

Topics: Other

Countries: United States