The Impact of Technology and Trade on Migration: Evidence from the US

60 Pages Posted: 13 Jan 2020

See all articles by Marius Faber

Marius Faber

University of Basel

Andres Sarto

Princeton University

Marco Tabellini

Harvard Business School

Date Written: December 31, 2019

Abstract

Migration has long been considered one of the key mechanisms through which labor markets adjust to economic shocks. In this paper, we analyze the migration response of American workers to two of the most important shocks that have hit Western economies since the late 1990s – import competition from China and the introduction of industrial robots. Exploiting plausibly exogenous variation in exposure across US local labor markets over time, we first verify that both shocks led to a steep reduction in manufacturing employment. Next, we present our main results, and show that, on average, robots caused a sizable reduction in population size, whereas trade with China did not. The decline in population size due to robots resulted from reduced in-migration into rather than increased out-migration away from affected areas. In the second part of the paper, we explore the mechanisms behind these results. We show that the two labor market shocks differ in their propagation across industries within local labor markets: while robots caused negative spillovers to service industries, Chinese imports, if anything, favored employment growth outside of manufacturing. We provide suggestive evidence that these propagation patterns are responsible for the differential migration response.

Keywords: migration, employment, technology, trade

JEL Classification: J21, J23, J61

Suggested Citation

Faber, Marius and Sarto, Andres and Tabellini, Marco, The Impact of Technology and Trade on Migration: Evidence from the US (December 31, 2019). Harvard Business School BGIE Unit Working Paper No. 20-071. Available at SSRN: https://ssrn.com/abstract=3517458 or http://dx.doi.org/10.2139/ssrn.3517458

Marius Faber

University of Basel ( email )

Petersplatz 1
Basel, CH-4003
Switzerland

Andres Sarto

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Marco Tabellini (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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