Trade Liberalization, Unemployment and Adjustment: Evidence from NAFTA Using State Level Data

Francis, John; Zheng, Yuqing

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Trade Liberalization, Unemployment and Adjustment: Evidence from NAFTA Using State Level Data

Applied Economics, Forthcoming

32 Pages Posted: 19 Jul 2009

See all articles by John Francis

John Francis

Louisiana Tech University - Department of Economics and Finance

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Date Written: July 16, 2009

Abstract

This paper specifies a supply and demand model of the labor market to examine the effects of NAFTA on the US labor market. Regression results suggest that NAFTA decreased yearly unemployment growth by 4.4%. Equivalently, NAFTA brought a structural break to US state level unemployment. The second finding is that the labor market began feeling the impact of NAFTA immediately after its implementation and the labor market has continued to feel its effects probably through 2001.

Keywords: NAFTA, unemployment, state, adjustment period

JEL Classification: F16, J64, C33

Suggested Citation: Suggested Citation

Francis, John and Zheng, Yuqing, Trade Liberalization, Unemployment and Adjustment: Evidence from NAFTA Using State Level Data (July 16, 2009). Applied Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1434930