International Trade and Local Labor Markets: Do Foreign and Domestic Shocks Affect Regions Differently?

Mark Partridge, Dan Rickman, Rose Olfert () and Ying Tan
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Rose Olfert: University of Saskatchewan

No 1507, Economics Working Paper Series from Oklahoma State University, Department of Economics and Legal Studies in Business

Abstract: Despite the attention given to international trade in discussion of the economic struggles of many U.S. regions, it is unclear whether international trade shocks impact local economies more, or differently, than shocks originating within the domestic economy. A challenge in making this discernment is separating trade shocks from common or domestic shocks. Therefore, using U.S. county-level data for 1990-2010, this study carefully constructs shocks to local economies, isolating those arising from international imports and exports to assess whether trade shocks have different effects from domestic shocks. In confirmatory analysis, we also employ a novel combination of IV and matching strategies. We examine a variety of indicators including employment growth, population growth, employment rates, wage rates and poverty rates. The results suggest that international trade shocks have some different effects than overall domestic shocks, though likely less than commonly perceived. We also find that domestic shocks dominate international trade shocks in explaining variation in regional labor market outcomes.

Keywords: international trade; local labor markets; economic shocks; economic geography; regional and urban economics (search for similar items in EconPapers)
JEL-codes: R00 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2015-09
New Economics Papers: this item is included in nep-geo and nep-int
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Related works:
Journal Article: International trade and local labor markets: Do foreign and domestic shocks affect regions differently? (2017)
Working Paper: International Trade and Local Labor Markets: Do Foreign and Domestic Shocks Affect Regions Differently? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:okl:wpaper:1507

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