The Surprisingly Swift Decline of U.S. Manufacturing Employment

This paper finds a link between the sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade. These results are robust to other potential explanations of the employment loss, and we show that the U.S. employment trends differ from those in the EU, where there was no change in policy.

Keywords: manufacturing, trade policy, uncertainty, offshoring, supply chains, employment, China, World Trade Organizations, PNTR

JEL Classification: F130, F160, F610, F660, J230

Suggested Citation: Suggested Citation

Pierce, Justin R. and Schott, Peter K., The Surprisingly Swift Decline of U.S. Manufacturing Employment (January 27, 2014). CESifo Working Paper Series No. 4563, Available at SSRN: https://ssrn.com/abstract=2385881 or http://dx.doi.org/10.2139/ssrn.2385881