This paper investigates the effects of international trade policy on wages in U.S. manufacturing industries in 1983. The data set combines micro labor market data with comprehensive data on tariffs and nontariff trade barriers such as quotas and antidumping duties. The authors find that workers in unprotected, export-oriented industries had higher wages than workers with similar observable characteristics in protected, import-competing industries; more specifically, exports had a positive wage effect and imports had a smaller negative wage effect. Other findings are that nontariff barriers had no significant effect on wages, and tariffs appear to have had a large negative wage effect, even after the authors control for the trade protection received by low-wage industries.
Get full access to this article
View all access options for this article.
References
1.
AbowdJohn M.1987. “The Effects of International Competition on Collective Bargaining Settlements in the United States.” Unpublished paper, Princeton University.
2.
AbowdJohn M.1991. “The NBER Immigration, Trade, and Labor Market Data Files.” In AbowdJohn M.FreemanRichard B., eds., Immigration, Trade, and Labor Markets. Chicago: NBER, pp. 407–21.
3.
AbowdJohn M.LemieuxThomas. 1991. “The Effects of International Trade on Collective Bargaining Outcomes: A Comparison of the United States and Canada.” In AbowdJohn M.FreemanRichard B., eds., Immigration, Trade, and Labor Markets. Chicago: NBER, pp. 343–67.
4.
BaldwinRobert E.1985. The Political Economy of U.S. Import Competition. Cambridge, Mass.: MIT Press.
5.
BallDavid Stafford. 1967. “United States Effective Tariffs and Labor's Share.”Journal of Political Economy, Vol. 75, No. 2 (April), pp. 183–87.
6.
BelsleyDavid A.KuhEdwinWelschRoy E., 1980. Regression Diagnostics. New York: Wiley.
7.
BranderJames A.KrugmanPaul R., 1983. “A ‘Reciprocal Dumping’ Model of International Trade.”Journal of International Economics, Vol. 15, No. 3–4 (November), pp. 313–21.
8.
BrownDrusilla K.1992. “The Impact of a North American Free Trade Area: Applied General Equilibrium Models.” In LustigNoraBosworthBarryLawrenceRobert Z., eds., North American Free Trade: Assessing the Impact. Washington, D.C.: Brookings Institution, pp. 26–68.
9.
BrownDrusilla K.DeardorffAlan V.SternRobert M., 1992. “A North American Free Trade Agreement: Analytical Issues and a Computational Assessment.”World Economy, Vol. 15, No. 1 (January), pp. 11–30.
10.
ChehJohn H.1974. “United States Concessions in the Kennedy Round and Short-run Labor Adjustment Costs.”Journal of International Economics, Vol. 4, No. 4 (November), pp. 323–40.
11.
CoxDavidHarrisRichard G., 1985. “Trade Liberalization and Industrial Organization: Some Estimates for Canada.”Journal of Political Economy, Vol. 93, No. 1 (February), pp. 115–45.
12.
DeardorffAlan V.1987. “Why Do Governments Prefer Nontariff Barriers?”Carnegie Rochester Conference Series on Public Policy, Vol. 26, No. 1 (Spring), pp. 191–216.
13.
DeardorffAlan V.SternRobert M., 1986. The Michigan Model of World Production and Trade: Theory and Applications. Cambridge, Mass.: MIT Press.
14.
DickensWilliam T.KatzLawrence F., 1987. “Inter-Industry Wage Differences.” In LangKevinLeonardJonathan S., eds., Unemployment and the Structure of Labor Markets. New York: Basil Blackwell, pp. 48–89.
15.
DickensWilliam T.LangKevin. 1988. “Why It Matters What We Trade: A Case for Active Policy.” In TysonLaura D'AndreaDickensWilliam T.ZysmanJohn, eds., The Dynamics of Trade and Employment. Cambridge, Mass.: Ballinger, pp. 87–112.
16.
FreemanRichard B.KatzLawrence F., 1991. “Industrial Wage and Employment Determination in an Open Economy.” In AbowdJohn M.FreemanRichard B., eds., Immigration, Trade, and Labor Markets. Chicago: NBER, pp. 235–59.
17.
GastonNoelTreflerDaniel. 1993. “Tariffs, Nontariff Barriers to Trade, and Workers' Wages.” In BairamErkin, ed., Studies in Labour Economics. Aldershot: Ashgate, pp. 72–110.
18.
GastonNoelTreflerDaniel. 1994a. “The Role of International Trade and Trade Policy in the Labor Markets of Canada and the United States.”World Economy, Vol. 17, No. 1 (January), pp. 45–62.
19.
GastonNoelTreflerDaniel. 1994b. Union Wage Sensitivity to Trade Protection: Theory and Evidence.” Unpublished paper, University of Toronto.
20.
GibbonsRobertKatzLawrence F., 1992. “Does Unmeasured Ability Explain Inter-Industry Wage Differentials?”Review of Economic Studies, Vol. 59, No. 3 (July), pp. 515–35.
21.
GrossmanGene M.1984. “International Competition and the Unionized Sector.”Canadian Journal of Economics, Vol. 17, No. 3 (August), pp. 541–56.
22.
GrossmanGene M.1987. “The Employment and Wage Effects of Import Competition in the United States.”Journal of International Economic Integration, Vol. 2, No. 1 (Spring), pp. 1–23.
23.
HarrisRichard. 1984. “Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition.”American Economic Review, Vol. 74, No. 5 (December), pp. 1016–32.
24.
HelwegeJean. 1992. “Sectoral Shifts and Interindustry Wage Differentials.”Journal of Labor Economics, Vol. 10, No. 1 (January), pp. 55–84.
25.
HorstmannIgnatius J.MarkusenJames R., 1986. “Up the Average Cost Curve: Inefficient Entry and the New Protectionism.”Journal of International Economics, Vol. 20, No. 3–4 (May), pp. 225–47.
26.
JacobsonLouis. 1992. “Congressional Testimony on the Effectiveness of Trade Adjustment Assistance and Suggestions for Improving the Program.”W.E. Upjohn Institute for Employment Research, Working Paper No. 92-12.
27.
KatzLawrence F.SummersLawrence H., 1989. “Can Inter-Industry Wage Differentials Justify Strategic Trade Policy?” In FeenstraRobert C., ed., Trade Policies for International Competitiveness. Chicago: University of Chicago Press, pp. 85–116.
28.
KruegerAlan B.SummersLawrence H., 1988. “Efficiency Wages and the Inter-Industry Wage Structure.”Econometrica, Vol. 56, No. 2 (March), pp. 259–93.
29.
KruseDouglas L.1988. “International Trade and the Labor Market Experience of Displaced Workers.”Industrial and Labor Relations Review, Vol. 41, No. 3 (April), pp. 402–17.
30.
LawrenceColinLawrenceRobert Z., 1985. “Manufacturing Wage Dispersion: An End Game Interpretation.”Brookings Papers on Economic Activity, Vol. 16, No. 1, pp. 47–106.
31.
LeamerEdward E.1988. “Cross-Section Estimation of the Effects of Trade Barriers.” In FeenstraRobert C., ed., Empirical Methods for International Trade. Cambridge, Mass.: MIT Press, pp. 51–82.
32.
LipseyRobert E.MolinariLindaKravisIrving B., 1991. “Measures of Prices and Price Competitiveness in International Trade in Manufactured Goods.” In HooperPeterRichardsonJ. David, eds., International Economic Transactions: Issues in Measurement and Empirical Research. Chicago: University of Chicago Press, pp. 144–95.
33.
MacphersonDavid A.StewartJames B., 1990. “The Effect of International Competition on Union and Nonunion Wages.”Industrial and Labor Relations Review, Vol. 43, No. 4 (April), pp. 434–46.
34.
MageeStephen P.BrockWilliam A.YoungLeslie. 1989. Black Hole Tariffs and Endogenous Policy Theory: Political Economy in General Equilibrium. New York: Cambridge University Press.
35.
MayerWolfgang. 1974. “Short-Run and Long-Run Equilibrium for a Small Open Economy.”Journal of Political Economy, Vol. 82, No. 5 (September/October), pp. 955–67.
36.
McDonaldIan M.SolowRobert M., 1981. “Wage Bargaining and Unemployment.”American Economic Review, Vol. 71, No. 5 (December), pp. 896–908.
37.
NelsonCharles R.StartzRichard. 1990. “Some Further Results on the Exact Small Sample Properties of the Instrumental Variables Estimator.”Econometrica, Vol. 58, No. 4 (July), pp. 967–76.
38.
RayEdward John. 1981. “The Determinants of Tariff and Nontariff Trade Restrictions in the United States.”Journal of Political Economy, Vol. 89, No. 1 (February), pp. 105–21.
39.
RevengaAna L.1992. “Exporting Jobs? The Impact of Import Competition on Employment and Wages in U.S. Manufacturing.”Quarterly Journal of Economics, Vol. 107, No. 1 (February), pp. 255–84.
40.
SternRobert M.DeardorffAlan V.BrownDrusilla K., 1992. “A U.S.-Mexico-Canada Free Trade Agreement: Sectoral Employment Effects and Regional/Occupational Employment Realignments in the United States.” In The Employment Effects of the North American Free Trade Agreement: Recommendations and Background Studies, Special Report No. 33, National Commission for Employment Policy.
41.
StolperWolfgang F.SamuelsonPaul A., 1941. “Protection and Real Wages.”Review of Economic Studies, Vol. 9, No. 1 (November), pp. 58–73.
42.
TopelRobert H.1991. “Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority.”Journal of Political Economy, Vol. 99, No. 1 (February), pp. 145–76.
43.
TreflerDaniel. 1993. “Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy.”Journal of Political Economy, Vol. 101, No. 1 (February), pp. 138–60.
