When Protectionism Kills Talent

Mehmet Canayaz, Isil Erel, Umit G. Gurun and Yufeng Wu
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Mehmet Canayaz: Pennsylvania State U
Isil Erel: Ohio State U and ECGI
Umit G. Gurun: U of Texas at Dallas
Yufeng Wu: Ohio State U

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: We examine the repercussions of protectionist policies implemented in the United States since 2018 on the composition of workforce and career choices within the semiconductor industry. We find that the shift towards protectionism, aimed at reviving domestic manufacturing and employment, paradoxically resulted in a significant drop in hiring domestic talent. The effect is stronger for entry-level and junior positions, indicating a disproportionate impact on newcomers to the workforce. Additionally, we trace the trajectories of undergraduate and graduate cohorts possessing chip-related skills over time, and document significant shifts away from the chip industry. These findings are consistent with our model in which protectionist policies affect labor markets through revenue, uncertainty, and substitution channels, potentially leading to decreased hiring of both domestic and foreign workers. Our findings highlight the challenges in achieving the goals of initiatives like the 2022 CHIPS and Science Act, emphasizing the need to address talent shortages to sustain the semiconductor industry's intended growth.

JEL-codes: F16 G15 J21 J23 L10 O30 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-int and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2024-07

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