Papers

When Work Disappears: Manufacturing Decline and the Falling Marriage-Market Value of Men
David Autor, David Dorn, and Gordon Hanson
Working Paper, July 2017

Abstract: The structure of marriage and child-rearing in U.S. households has undergone two marked shifts in the last three decades: a steep decline in the prevalence of marriage among young adults, and a sharp rise in the fraction of children born to unmarried mothers or living in single-headed households. A potential contributor to both phenomena is the declining labor-market opportunities faced by males, which make them less valuable as marital partners. We exploit large scale, plausibly exogenous labor-demand shocks stemming from rising international manufacturing competition during the period of 1990 to 2014 to test how shifts in the supply of young ‘marriageable’ males affect marriage, fertility and children’s living circumstances. Trade shocks to manufacturing industries have particularly negative impacts on the labor market prospects of men and degrade their marriage-market value along multiple dimensions: diminishing their relative earnings—particularly at the lower segment of the distribution—reducing their physical availability in trade-impacted labor markets, and increasing their participation in risky and damaging behaviors. We document that adverse shocks to the supply of ‘marriageable’ men reduce the prevalence of marriage and lower fertility but raise the fraction of children born to young and unwed mothers and living in poor single-parent households.


Response to Robert Feenstra, Hong Ma, and Yuan Xu’s Comment on Autor, Dorn, and Hanson (AER 2013)
David Autor, David Dorn, and Gordon Hanson

A 2017 comment by Feenstra, Ma, and Xu (FMX) claims that the estimation results on the impact of import competition on labor-market outcomes in Autor, Dorn and Hanson’s 2013 AER article (ADH) are biased by the exclusion of controls for contemporaneous changes in housing prices. In investigating these concerns, we find that (a) the trend component of local housing-price changes on which FMX primarily rely is highly likely to be endogenous to trade shocks, and (b) when one incorporates measures of plausibly exogenous changes in housing prices into the main ADH specifications, there is little change in ADH’s main empirical results. The key conclusions in FMX’s comment stem from either using endogenous house price changes—which are themselves affected by the China trade shock, as documented by extant literature—or by employing an instrumentation strategy that inadvertently uses the China trade shock as an instrument for house price changes and then incorrectly infers that house price changes (not the China shock) are the cause of adverse employment outcomes. We conclude that the main critique provided by the comment is not supported empirically.

 

Comment on Jonathan Rothwell’s Critique of Autor, Dorn, and Hanson (2013)
David Autor, David Dorn, and Gordon Hanson
March 2017

In a series of recent papers, Rothwell (2016a, 2016b, 2017) claims that the empirical results in Autor, Dorn, and Hanson (2013) on the impact of import competition with China on local labor markets in the United States are subject to specification bias, not robust to separating the sample into sub-periods, and subject to other weaknesses in analytical approach. In this note, we respond to the main thrust of Rothwell’s comments on ADH.

 

Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure
David Autor, David Dorn, Gordon Hanson and Kaveh Majlesi
Working Paper, December 2016

Abstract: Has rising import competition contributed to the polarization of U.S. politics? Analyzing outcomes from the 2002 and 2010 congressional elections, we detect an ideological realignment that is centered in trade-exposed local labor markets and that commences prior to the divisive 2016 U.S. presidential election. Exploiting the exogenous component of rising trade with China and classifying legislator ideologies by congressional voting records, we find strong evidence that congressional districts exposed to larger increases in import penetration disproportionately removed moderate representatives from office in the 2000s. Trade-exposed districts with an initial majority white population or initially in Republican hands became substantially more likely to elect a conservative Republican, while trade-exposed districts with an initial majority-minority population or initially in Democratic hands became more likely to elect a liberal Democrat. We interpret these results as supporting a political economy literature that connects adverse economic conditions to support for nativist politicians. We also contrast the electoral impacts of trade exposure with shocks associated with generalized changes in labor demand and the post-2006 U.S. housing market collapse.


A Note on the Effect of Rising Trade Exposure on the 2016 Presidential Election

David Autor, David Dorn, Gordon Hanson, and Kaveh Majlesi
Appendix to “Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure,” November 2016

This research note examines whether the exposure of local labor markets to increased import competition from China effected voting in the U.S. presidential election in 2016. It relates the change in the county-level Republican two-party vote share between 2000 and 2016 to the growth in local labor markets’ exposure to Chinese import penetration. We find a robust positive effect of rising import competition on Republican vote share gains. The magnitude of the Republican gains is non-trivial. A counterfactual study of closely contested states suggests that Michigan, Wisconsin, Pennsylvania and North Carolina would have elected the Democrat instead of the Republican candidate if, ceteris paribus, the growth in Chinese import penetration had been 50 percent lower than the actual growth during the period of analysis. The Democrat candidate would also have obtained a majority in the electoral college in this counterfactual scenario. These results add to previous research that documents negative impacts of import competition on employment and earnings in trade-exposed local labor markets (Autor, Dorn and Hanson, 2013; Acemoglu et al. 2016) and a decreased likelihood that moderate politicians win congressional elections in such locations (Autor, Dorn, Hanson and Majlesi, 2016).


The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade

David Autor, David Dorn, and Gordon Hanson
Annual Review of Economics Vol. 8 p. 205-240, October 2016

Abstract: China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.


Foreign Competition and Domestic Innovation: Evidence from U.S. Patents

David Autor, David Dorn, Gordon Hanson, Gary Pisano, and Pian Shu
Working Paper, November 2016

Abstract: Manufacturing is the locus of U.S. innovation, accounting for more than three quarters of U.S. corporate patents. The rise of import competition from China has represented a major competitive shock to the sector. We study how U.S. manufacturing firms have responded to this shock. The impact of increasing product market competition on innovation is theoretically ambiguous. On the one hand, greater import penetration resulting, for example, from deepening supply chains in Asia, may reduce overall U.S. presence in industries where opportunities for innovation are most abundant. On the other hand, foreign competition may increase domestic innovation within industries by encouraging firms to concentrate on product segments that are more intensive in R&D or to engage in defensive innovation within existing segments. We confront two empirical challenges in assessing how rising import competition has affected U.S. innovation. We map all U.S. utility patents granted by March 2013 to firm-level data using a novel internet-based matching algorithm that corrects for a preponderance of false negatives when using firm names alone. And we contend with the fact that patenting is highly concentrated in certain product categories and that this concentration has been shifting over time. From 1991 to 2007, patenting increased strongly in computers and electronics, industries that also registered a large rise in import exposure. Patents decreased by equal measure in chemicals, a sector with little change in foreign competition from China. Superficially, this would suggest that rising competition has spurred innovative activity. Accounting for strong secular trends in innovative activities in these two broad sectors, however, we find that the impact of the change in import exposure on the change in patents produced is strongly negative. It remains so once we add an extensive set of further industry- and firm-level controls. Rising import exposure also reduces global employment, global sales, and global R&D expenditure at the firm level. It would appear that a simple mechanism in which greater foreign competition induces U.S. manufacturing firms to contract their operations along multiple margins of activity goes a long way toward explaining the response of U.S. innovation to the China trade shock.


Import Competition and the Great U.S. Employment Sag of the 2000s
Daron Acemoglu, David Autor, David Dorn, Gordon Hanson, and Brendan Price
Journal of Labor Economics, January 2016

Abstract: Even before the Great Recession, US employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable employment gains achieved during the 1990s, with a historic contraction in manufacturing employment being a prime contributor to the slump. We estimate that import competition from China, which surged after 2000, was a major force behind both recent reductions in US manufacturing employment and—through input-output linkages and other general equilibrium channels— weak overall US job growth. Our central estimates suggest job losses from rising Chinese import competition over 1999–2011 in the range of 2.0–2.4 million.

External link to data


Untangling Trade and Technology: Evidence from Local Labor Markets
David Autor, David Dorn, and Gordon Hanson
The Economic Journal, May 2015

Abstract: We juxtapose the effects of trade and technology on employment in US local labour markets between 1980 and 2007. Labour markets whose initial industry composition exposes them to rising Chinese import competition experience significant falls in employment, particularly in manufacturing and among non-college workers. Labour markets susceptible to computerisation due to specialisation in routine task-intensive activities instead experience occupational polarisation within manufacturing and non-manufacturing but do not experience a net employment decline. Trade impacts rise in the 2000s as imports accelerate, while the effect of technology appears to shift from automation of production activities in manufacturing towards computerisation of informationprocessing tasks in non-manufacturing.

External link to data

 

Trade Adjustment: Worker Level Evidence
David Autor, David Dorn, Gordon Hanson, and Jae Song
Quarterly Journal of Economics, September 2014

Abstract: We analyze the effect of exposure to international trade on earnings and employment of U.S. workers from 1992 through 2007 by exploiting industry shocks to import competition stemming from China’s spectacular rise as a manufacturing exporter paired with longitudinal data on individual earnings by employer spanning close to two decades. Individuals who in 1991 worked in manufacturing industries that experienced high subsequent import growth garner lower cumulative earnings, face elevated risk of obtaining public disability benefits, and spend less time working for their initial employers, less time in their initial two-digit manufacturing industries, and more time working elsewhere in manufacturing and outside of manufacturing. Earnings losses are larger for individuals with low initial wages, low initial tenure, and low attachment to the labor force. Low-wage workers churn primarily among manufacturing sectors, where they are repeatedly exposed to subsequent trade shocks. High-wage workers are better able to move across employers with minimal earnings losses and are more likely to move out of manufacturing conditional on separation. These findings reveal that import shocks impose substantial labor adjustment costs that are highly unevenly distributed across workers according to their skill levels and conditions of employment in the pre-shock period.


The China Syndrome: Local Labor Market Effects of Import Competition in the United States

David Autor, David Dorn, and Gordon Hanson
American Economic Review, October 2013

Abstract: We analyze the effect of rising Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization and instrumenting for US imports using changes in Chinese imports by other high-income countries. Rising imports cause higher unemployment, lower labor force participation, and reduced wages in local labor markets that house import-competing manufacturing industries. In our main specification, import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets.

External link to data


The Geography of Trade and Technology Shocks in the United States

David Autor, David Dorn, Gordon Hanson
American Economic Review Papers and Proceedings, May 2013

Abstract: This paper explores the geographic overlap of trade and technology shocks across local labor markets in the United States. Regional exposure to technological change, as measured by specialization in routine task-intensive production and clerical occupations, is largely uncorrelated with regional exposure to trade competition from China. While the impacts of technology are dispersed throughout the United States, the impacts of trade tend to be more geographically concentrated, owing in part to the spatial agglomeration of labor-intensive manufacturing. Our findings highlight the feasibility of separately identifying the impacts of recent changes in trade and technology on US regional economies.