When Protectionism Kills Talent

We examine the repercussions of protectionist policies implemented in the United States since 2018 on the composition of workforce and career choices within the semiconductor industry. We find that the shift towards protectionism, aimed at reviving domestic manufacturing and employment, paradoxically resulted in a significant drop in hiring domestic talent. The effect is stronger for entry-level and junior positions, indicating a disproportionate impact on newcomers to the workforce. Additionally, we trace the trajectories of undergraduate and graduate cohorts possessing chip-related skills over time, and document significant shifts away from the chip industry. These findings are consistent with our model in which protectionist policies affect labor markets through revenue, uncertainty, and substitution channels, potentially leading to decreased hiring of both domestic and foreign workers. Our findings highlight the challenges in achieving the goals of initiatives like the 2022 CHIPS and Science Act, emphasizing the need to address talent shortages to sustain the semiconductor industry's intended growth.

Keywords: Economic nationalism, Workforce, Chip, Protectionism, Tariff, Career

JEL Classification: F16, J21, J23, O3, L1, G15

Suggested Citation: Suggested Citation

Canayaz, Mehmet and Erel, Isil and Gurun, Umit G. and Wu, Yufeng, When Protectionism Kills Talent (October 03, 2024). Fisher College of Business Working Paper No. 2024-03-007, Charles A. Dice Center Working Paper No. 2024-07, Available at SSRN: https://ssrn.com/abstract=4773403 or http://dx.doi.org/10.2139/ssrn.4773403