IDEAS home Printed from https://ideas.repec.org/p/okl/wpaper/1507.html
   My bibliography  Save this paper

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

Author

Listed:
  • Mark D. Partridge

    (Ohio State University)

  • Dan S. Rickman

    (Oklahoma State University)

  • M. Rose Olfert

    (University of Saskatchewan)

  • Ying Tan

    (Zhongnan University of Economics and Law)

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.

Suggested Citation

  • Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2015. "International Trade and Local Labor Markets: Do Foreign and Domestic Shocks Affect Regions Differently?," Economics Working Paper Series 1507, Oklahoma State University, Department of Economics and Legal Studies in Business.
    • Handle: RePEc:okl:wpaper:1507
    as

    Download full text from publisher

    File URL: https://business.okstate.edu/site-files/docs/ecls-working-papers/OKSWPS1507r.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Petia Topalova, 2010. "Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty from India," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 1-41, October.
    2. Mark D. Partridge & Dan S. Rickman & Kamar Ali & M. Rose Olfert, 2008. "Lost in space: population growth in the American hinterlands and small cities," Journal of Economic Geography, Oxford University Press, vol. 8(6), pages 727-757, November.
    3. Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 74(1), pages 70-93, January.
    4. Combes, Pierre-Philippe & Magnac, Thierry & Robin, Jean-Marc, 2004. "The dynamics of local employment in France," Journal of Urban Economics, Elsevier, vol. 56(2), pages 217-243, September.
    5. Hartmut Egger & Udo Kreickemeier, 2017. "Firm Heterogeneity and the Labor Market Effects of Trade Liberalization," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 10, pages 265-306, World Scientific Publishing Co. Pte. Ltd..
    6. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum, 2014. "The Rise Of The East And The Far East: German Labor Markets And Trade Integration," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1643-1675, December.
    7. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants," Journal of International Economics, Elsevier, vol. 68(1), pages 219-237, January.
    8. Robin Leichenko & Julie Silva, 2004. "International Trade, Employment and Earnings: Evidence from US Rural Counties," Regional Studies, Taylor & Francis Journals, vol. 38(4), pages 355-374.
    9. Partridge, Mark D. & Rickman, Dan S. & Ali, Kamar & Olfert, M. Rose, 2009. "Agglomeration spillovers and wage and housing cost gradients across the urban hierarchy," Journal of International Economics, Elsevier, vol. 78(1), pages 126-140, June.
    10. McGranahan, David A., 1999. "Natural Amenities Drive Rural Population Change," Agricultural Economic Reports 33955, United States Department of Agriculture, Economic Research Service.
    11. Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2015. "When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1303-1325, August.
    12. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2007. "Comparative Advantage and Heterogeneous Firms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(1), pages 31-66.
    13. Robert Z. Lawrence & Lawrence Edward, 2010. "US Trade and Wages: The Misleading Implications of Conventional Trade Theory," Working Paper Series WP10-9, Peterson Institute for International Economics.
    14. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, November.
    15. Guy Michaels, 2008. "The Effect of Trade on the Demand for Skill: Evidence from the Interstate Highway System," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 683-701, November.
    16. Shushanik Hakobyan & John McLaren, 2016. "Looking for Local Labor Market Effects of NAFTA," The Review of Economics and Statistics, MIT Press, vol. 98(4), pages 728-741, October.
    17. Combes, Pierre-Philippe & Magnac, Thierry & Robin, Jean-Marc, 2004. "The dynamics of local employment in France," Journal of Urban Economics, Elsevier, vol. 56(2), pages 217-243, September.
    18. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    19. David Card & Ethan G. Lewis, 2007. "The Diffusion of Mexican Immigrants during the 1990s: Explanations and Impacts," NBER Chapters, in: Mexican Immigration to the United States, pages 193-228, National Bureau of Economic Research, Inc.
    20. Mark D. Partridge & Dan S. Rickman & Kamar Ali, 2008. "Recent Immigration and Economic Outcomes in Rural America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1326-1333.
    21. Robert Z. Lawrence, 2008. "Blue-Collar Blues: Is Trade to Blame for Rising US Income Inequality?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa85, January.
    22. Ivan T. Kandilov, 2009. "The Effects Of Trade With Developing Countries On The Regional Demand For Skill In The U.S.: Evidence From County Data," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 459-482, August.
    23. George R. Neumann & Robert H. Topel, 1991. "Employment Risk, Diversification, and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1341-1365.
    24. Bound, John & Holzer, Harry J, 2000. "Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 20-54, January.
    25. Mark D. Partridge & Dan S. Rickman, 2006. "The Geography of American Poverty: Is There a Need for Place-Based Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number gap, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rickman, Dan S. & Wang, Hongbo, 2018. "Two tales of two U.S. states: Regional fiscal austerity and economic performance," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 46-55.
    2. Timothy J. Bartik & Nathan Sotherland, 2019. "Local Job Multipliers in the United States: Variation with Local Characteristics and with High-Tech Shocks," Upjohn Working Papers 19-301, W.E. Upjohn Institute for Employment Research.
    3. Rajbhandari, Isha & Faggian, Alessandra & Partridge, Mark D., 2022. "Oil and gas boomtowns and occupations: What types of jobs are created?," Energy Economics, Elsevier, vol. 115(C).
    4. Bell, Kathleen P. & Crandall, Mindy & Munroe, Darla K. & Colocousis, Chris & Morzillo, Anita, 2018. "Rural forest-based communities, economic shocks, and economic trajectories," 2018 Annual Meeting, August 5-7, Washington, D.C. 274499, Agricultural and Applied Economics Association.
    5. Mark Partridge & Alexandra Tsvetkova & Michael Betz, 2021. "Are the most productive regions necessarily the most successful? Local effects of productivity growth on employment and earnings," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 30-61, January.
    6. Yelena Andreyeva & Artyom Ratner & Oksana Voronkova & Anatoly Tarasov, 2018. "The Influence of Import Substitution on Regional Positioning in the System of International Economic Relations," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 1438-1449.
    7. Bo Feng, 2023. "Charter school proliferation and school district fiscal stress, a chicken‐egg problem," Growth and Change, Wiley Blackwell, vol. 54(4), pages 853-869, December.
    8. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2018. "Who Benefits from Local Oil and Gas Employment? Labor Market Composition in the Oil and Gas Industry in Texas," GLO Discussion Paper Series 246, Global Labor Organization (GLO).
    9. Tsvetkova, Alexandra, 2016. "Do diversity, creativity and localized competition promote endogenous firm formation? Evidence from a high-tech US industry," MPRA Paper 72349, University Library of Munich, Germany.
    10. Min Zhang & Mark D. Partridge & Huasheng Song, 2020. "Amenities and the geography of innovation: evidence from Chinese cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(1), pages 105-145, August.
    11. Clément Malgouyres, 2017. "The Impact Of Chinese Import Competition On The Local Structure Of Employment And Wages: Evidence From France," Journal of Regional Science, Wiley Blackwell, vol. 57(3), pages 411-441, June.
    12. Nikolaos Terzidis & Raquel Ortega‐Argilés, 2021. "Employment polarization in regional labor markets: Evidence from the Netherlands," Journal of Regional Science, Wiley Blackwell, vol. 61(5), pages 971-1001, November.
    13. Jhorland Ayala-García & Federico Ceballos-Sierra, 2024. "How do environmental shocks affect competitors in a supply chain? Evidence from a competitors’ weighting matrix," Documentos de trabajo sobre Economía Regional y Urbana 324, Banco de la Republica de Colombia.
    14. Rickman, Dan S. & Wang, Hongbo, 2023. "COVID-19 and Beyond: Economic Outcomes in Republican vs. Democratic States," MPRA Paper 118531, University Library of Munich, Germany.
    15. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2019. "Who benefits from local oil and gas employment? Labor market composition in the oil and gas industry in Texas and the rest of the United States," Energy Economics, Elsevier, vol. 84(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Partridge, Mark D. & Rickman, Dan & Olfert, M. Rose & Tan, Ying, 2013. "International Trade and Local Labor Markets: Are Foreign and Domestic Shocks Created Differently?," MPRA Paper 53407, University Library of Munich, Germany.
    2. Stephen J. Redding, 2020. "Trade and Geography," NBER Working Papers 27821, National Bureau of Economic Research, Inc.
    3. Muendler, Marc-Andreas, 2017. "Trade, technology, and prosperity: An account of evidence from a labor-market perspective," WTO Staff Working Papers ERSD-2017-15, World Trade Organization (WTO), Economic Research and Statistics Division.
    4. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    5. Partridge, Mark D. & Rickman, Dan S. & Olfert, M. Rose & Ali, Kamar, 2012. "Dwindling U.S. internal migration: Evidence of spatial equilibrium or structural shifts in local labor markets?," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 375-388.
    6. Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2015. "When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1303-1325, August.
    7. David H. Autor & David Dorn & Gordon H. Hanson & Jae Song, 2014. "Trade Adjustment: Worker-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1799-1860.
    8. Clément Malgouyres, 2017. "The Impact Of Chinese Import Competition On The Local Structure Of Employment And Wages: Evidence From France," Journal of Regional Science, Wiley Blackwell, vol. 57(3), pages 411-441, June.
    9. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
    10. Karin Mayr-Dorn & Gaia Narciso & Duc Anh Dang & Hien Phan, 2023. "Trade diversion and labor market adjustment: Vietnam and the U.S.-China trade war," Economics working papers 2023-04, Department of Economics, Johannes Kepler University Linz, Austria.
    11. Mark Partridge & Alexandra Tsvetkova & Michael Betz, 2021. "Are the most productive regions necessarily the most successful? Local effects of productivity growth on employment and earnings," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 30-61, January.
    12. Mark D., Partridge & Dan S., Rickman & M. Rose, Olfert & Kamar, Ali, 2010. "Dwindling U.S. Internal Migration: Evidence of Spatial Equilibrium?," MPRA Paper 28157, University Library of Munich, Germany.
    13. David Autor & David Dorn & Gordon Hanson, 2021. "On the Persistence of the China Shock," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 52(2 (Fall)), pages 381-476.
    14. Yu, Chan, 2023. "The role of immigrants in the United States labor market and Chinese import competition," Journal of International Economics, Elsevier, vol. 144(C).
    15. Robertson,Raymond & Kokas,Deeksha & Cardozo,Diego & Lopez-Acevedo,Gladys C., 2020. "Short and Long-Run Labor Market Effects of Developing Country Exports : Evidence from Bangladesh," Policy Research Working Paper Series 9176, The World Bank.
    16. Nina Pavcnik, 2017. "The Impact of Trade on Inequality in Developing Countries," NBER Working Papers 23878, National Bureau of Economic Research, Inc.
    17. Andrés Rodríguez-Pose & Tobias D. Ketterer, 2012. "Do Local Amenities Affect The Appeal Of Regions In Europe For Migrants?," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 535-561, October.
    18. Mestieri, Martí & Basco, Sergi & Smagghue, Gabriel & Liegey, Maxime, 2020. "The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem," CEPR Discussion Papers 15186, C.E.P.R. Discussion Papers.
    19. César, Andrés & Falcone, Guillermo & Gasparini, Leonardo, 2021. "Costs and benefits of trade shocks: Evidence from Chilean local labor markets," Labour Economics, Elsevier, vol. 73(C).
    20. Dix-Carneiro, Rafael & Kovak, Brian K., 2019. "Margins of labor market adjustment to trade," Journal of International Economics, Elsevier, vol. 117(C), pages 125-142.

    More about this item

    Keywords

    international trade; local labor markets; economic shocks; economic geography; regional and urban economics;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:okl:wpaper:1507. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Harounan Kazianga (email available below). General contact details of provider: https://edirc.repec.org/data/sboksus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.