Job Creation, Job Destruction, and the Real Exchange Rate

35 Pages Posted: 11 Apr 2000 Last revised: 2 Apr 2001

See all articles by Michael W. Klein

Michael W. Klein

Tufts University - The Fletcher School of Law and Diplomacy; National Bureau of Economic Research (NBER)

Scott D. Schuh

Federal Reserve Bank of Boston - Research Department

Robert K. Triest

Federal Reserve Bank of Boston - Research Department; Boston College

Date Written: January 2000

Abstract

This paper contributes to an understanding of internationally generated adjustment costs by demonstrating a statistically significant and economically relevant effect of the real exchange rate on job creation and job destruction in U.S. manufacturing industries over the period 1973 to 1993. The responsiveness of these gross job flows to the real exchange rate reflects pervasive heterogeneity with respect to international conditions across firms, even within narrowly defined industries. We document this heterogeneity and show that the responsiveness of job flows to movements in the real exchange rate varies with the industry's openness to international trade. We also show an asymmetry in the responsiveness of job flows to the real exchange rate; appreciations play a significant role in job destruction, but job flows do not respond significantly to dollar depreciations.

Suggested Citation

Klein, Michael W. and Schuh, Scott and Triest, Robert, Job Creation, Job Destruction, and the Real Exchange Rate (January 2000). NBER Working Paper No. w7466. Available at SSRN: https://ssrn.com/abstract=213469

Michael W. Klein (Contact Author)

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States
617-627-2718 (Phone)
617-627-3712 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Scott Schuh

Federal Reserve Bank of Boston - Research Department ( email )

600 Atlantic Ave.
Boston, MA 02210
United States
617-973-3941 (Phone)
617-619-7541 (Fax)

Robert Triest

Federal Reserve Bank of Boston - Research Department ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-3431 (Phone)
617-973-3957 (Fax)

Boston College ( email )

Chestnut Hill, MA 02167
United States

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