HOW DID EXCHANGE RATES AFFECT EMPLOYMENT IN U.S. CITIES?

Haifang Huang () and Yao Tang

Contemporary Economic Policy, 2016, vol. 34, issue 4, 678-697

Abstract: type="main" xml:id="coep12159-abs-0001"> We estimate the effects of exchange rate on U.S. employment, exploiting differences in industrial composition across major cities. We find that a 1% depreciation of export-weighted real exchange rate has a positive 0.98% direct effect on manufacturing employment. Its indirect effect on local nonmanufacturing employment rises with the size of the local manufacturing sector, consistent with the hypothesis that there exists a local spillover from the tradable to the nontradable sector. In cities with heavy concentration of manufacturing employment, the indirect effect is statistically significant and about 60% as large as the direct effect measured by the number of jobs. (JEL F3, F1, J2)

Date: 2016
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Working Paper: How Did Exchange Rates Affect Employment in US Cities? (2013)
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