Family and Demographic Effects in Worker Response to Trade Shocks: Results from the Matched CPS

The Moynihan Institute of Global Affairs’ Trade, Development and Political Economy Series presents John McLaren.

Numerous researchers have documented wage losses and local labor markets hit by rising import competition.  In a wide variety of settings, labor incomes in locations dependent on import-competing industries fall relative to incomes in other locations.  This paper attempts to see if there are differences in these effects between demographic groups in the US case in the context of the most studied example, commonly referred to as the "China Shock."  We examine the "matched CPS," which allows us to observe year-to-year economic transitions of a sample of US workers, to see if the losses in labor income fall more heavily on identifiable demographic groups.  We find that income losses are more likely in the face of a trade shock for workers in manufacturing; married workers; and workers with children -- the latter two plausibly because switching costs are greater.  

John McLaren is a Professor of Economics at the University of Virginia.  His research interests are International Trade, Political Economy, Industrial Organization, Economic Development, and the effects of Economic Globalization.