Survival of the Best Fit: Competition from Low Wage Countries and the (Uneven) Growth of Us Manufacturing Plants

Bernard, Andrew B.; Jensen, J. Bradford; Schott, Peter K.

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Survival of the Best Fit: Competition from Low Wage Countries and the (Uneven) Growth of Us Manufacturing Plants

NBER Working Paper No. w9170

37 Pages Posted: 14 Sep 2006 Last revised: 24 Jul 2022

See all articles by Andrew B. Bernard

Andrew B. Bernard

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

J. Bradford Jensen

Georgetown University - McDonough School of Business; Peterson Institute for International Economics

Peter K. Schott

Yale University - School of Management; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

There are 2 versions of this paper

Date Written: September 2002

Abstract

We examine the relationship between import competition from low wage countries and the reallocation of US manufacturing from 1977 to 1997. Both employment and output growth are slower for plants that face higher levels of low wage import competition in their industry. As a result, US manufacturing is reallocated over time towards industries that are more capital and skill intensive. Differential growth is driven by a combination of increased plant failure rates and slower growth of surviving plants. Within industries, low wage import competition has the strongest effects on the least capital and skill intensive plants. Surviving plants that switch industries move into more capital and skill intensive sectors when they face low wage competition.

Suggested Citation: Suggested Citation

Bernard, Andrew B. and Jensen, J. Bradford and Schott, Peter K., Survival of the Best Fit: Competition from Low Wage Countries and the (Uneven) Growth of Us Manufacturing Plants (September 2002). NBER Working Paper No. w9170, Available at SSRN: https://ssrn.com/abstract=330309