Making Sense of Anti-trade Sentiment: International Trade and the American Worker

266 Pages·2014·4.696 MB·English

by  Roger White (auth.)

Making Sense of Anti-trade Sentiment
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Making Sense of

Anti-trade Sentiment
International Trade and
the American Worker
Roger White
making sense of anti-trade sentiment
Copyright © Roger White, 2014.
Softcover reprint of the hardcover 1st edition 2014 978-1-137-37324-3
All rights reserved.
First published in 2014 by
PALGRAVE MACMILLAN®
in the United States— a division of St. Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Where this book is distributed in the UK, Europe and the rest of the world,
this is by Palgrave Macmillan, a division of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills,
Basingstoke, Hampshire RG21 6XS.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-1-349-47652-7 ISBN 978-1-137-37325-0 (eBook)
DOI 10.1057/9781137373250
Library of Congress Cataloging-in-Publication Data is available from the
Library of Congress.
A catalogue record of the book is available from the British Library.
Design by Newgen Knowledge Works (P) Ltd., Chennai, India.
First edition: September 2014
10 9 8 7 6 5 4 3 2 1
Contents

List of Figures and Tables vii
Preface xi
Acknowledgments xv
Part I Why It Is Important to Understand
Anti-trade Sentiment 1
1. Nearly Two Centuries Have Passed since David Ricardo . . . 3
2. Public Opinion of International Trade: America and the World 21
3. A Shift in Comparative Advantage? 37
Part II In Search of Stolper-Samuelson(-like) Effects 59
4. The Influences of Trade on Industry-level Wages
and Employment 61
5. Value Share Import Competition and US Manufacturing
Employment 77
6. The Employment Effects of Free Trade Agreements
and Industry Trade Orientation 89
7. Import Competition and the Probability of Job Displacement 109
8. State and Regional Variation in the Probability of
Trade-related Job Displacement 137
vi l Contents
Part III The Smooth Adjustment Hypothesis and
Policies That Assist Trade-displaced Workers 153
9. Does Intra-industry Trade Explain a Lack of Trade-related
Labor Market Dynamics? 155
10. Displacement-related Earnings Losses: Evaluating
Trade Adjustment Assistance and Wage Insurance 173
Part IV Making Sense of Anti-trade Sentiment 191
11. What May Explain Anti-trade Sentiment among
the American Public 193
12. Identifying the Determinants of Pro- and
Anti-trade Sentiment 215
13. Conclusions 233
Notes 237
References 241
Index 249
Figures and Tables

Figures
1.1 Public Opinion Poll Response Frequencies 7
1.2 US Trade Volumes and Trade Balances,
as Shares of GDP, 1960± 2012 8
1.3 Aggregate US Output and Manufacturing Sector
Output, 1960± 2010 10
1.4 Average Annual Income and Average Wages,
Aggregate and Manufacturing Sector, 1960± 2009 11
1.5 Employment in US Manufacturing, 1970± 2009 13
2.1 Weighted-average ª Trade is Goodº Percentages,
2007± 2011 (Pew GAP responses) 35
3.1 Initial Equilibrium in DFS Framework 41
3.2 Examples of Comparative Statics in the DFS Framework 44
3.3 Relative Changes in A(Z) Schedule-related Factor
Endowments, 1968± 2008 50
3.4 Relative Changes in Labor Supplies and Nominal
Wages by Comparison Cohort, 1968± 2008 51
3.5 Predicted Loss in US Comparative Advantage, 1968± 2008 54
5.1 Average Value Share Import Competition, by Industry
Exposure to Import Competition 80
8.1 Net Estimated Change in Displacement Probabilities 149
10.1 Time Path of Estimated Earnings Losses, All Workers 180
10.2 Time Path of Estimated Earnings Losses, by Union
Affiliation 181
10.3 Time Path of Estimated Earnings Losses, by Gender 182
10.4 Time Path of Estimated Earnings Losses, by Age
Classification 182
10.5 Time Path of Estimated Earnings Losses, by
Educational Attainment 183
10.6 Earnings Losses with and without ATAA 185
viii l Figures and Tables
10.7 Earnings Losses with and without TAA-funded Training 188
11.1 Trade Preferences, by Country 198
11.2 Risk-averse Preferences for International Trade 204
11.3 Trade Is Good (Average) [y axis] vs. Loss Averse
(i.e., Pessimist) (Average) [x axis] 206
11.4 Relative Gains and Losses, with and without
Imperfect Information 213
Tables
2.1 Trade as an Opportunity for Growth or a
Threat to the Economy? 23
2.2 World Public Opinion, Trade Is Good
(% Very Good + % Somewhat Good), 2007± 2011 33
3.1 Possible DFS Outcomes 46
3.2 Descriptive Statistics 48
3.3 Observed Factor Endowment Changes, 1968± 2008, and
Corresponding Changes in US Comparative Advantage 52
4.1 Descriptive Statistics 69
4.2 Estimated Trade-induced Labor Market Dynamics,
Common Exports and Import Penetration Effects 72
4.3 Estimated Trade-induced Labor Market Dynamics,
Cohort-specific Exports and Import Penetration Effects 73
5.1 Descriptive Statistics, All Industries and by Relative
Industry Exposure to Import Competition 81
5.2 Value Share Competition and Industry-level Employment,
Production Workers 84
5.3 Value Share Competition and Industry-level Employment,
Nonproduction Workers 85
6.1 Descriptive Statistics 92
6.2 Effects of Trade on Industry Employment 94
6.3 Effects of Free Trade Agreement-related Import
Competition on Industry Employment 98
6.4 Estimated Free Trade Agreement-related Employment
Effects, CUFTA and NAFTA 99
6.5 Descriptive Statistics 102
6.6 Effects of Trade on Industry Employment,
Net Exporting Industries 103
6.7 E ffects of Trade on Industry Employment,
Net Importing Industries 104
6.8 Estimated Aggregate Employment Effects 106
Figures and Tables l ix
7.1 Descriptive Statistics 115
7.2 Determinants of Job Displacement, Dependent Variable:
ª Displacedº = 1 (Binomial logit estimations) 117
7.3 Estimated Displacement Probabilities, by Worker Type 118
8.1 Observed State and Region Displacement Rates
(2-year periods), 1982± 1999 139
8.2 Descriptive Statistics 140
8.3 Determinants of Job Displacement, Dependent Variable:
ª Displacedº = 1 (Binomial logit estimations) 142
8.4 Average Estimated Displacement Probabilities
(presented as %) 144
8.5 Counterfactual Exercises 145
8.6 Net Change in Average Estimated Displacement
Probabilities Due to Imports and Exports (presented as %) 147
8.7 Estimated Effect of Trade on Average Estimated
Displacement Probabilities (presented as %) 148
9.1 Summary of Prior Studies of the Smooth Adjustment
Hypothesis 158
9.2 Descriptive Statistics 164
9.3 Correlation Matrix 165
9.4 Industry-level Employment Change and MIIT 167
9.5 Industry-level Employment Change and
VMIIT / HMIIT (α = 0.15) 168
9.6 Industry-level Employment Change and
VMIIT / HMIIT (α = 0.25) 169
10.1 Percent and Observed Losses in Real Annual Earnings,
Full Sample and Individual Subclassifications 178
10.2 Estimated Displacement-related Real Annual Earnings
Losses, Full Sample and Worker Subclassifications 179
10.3 Summary of Estimated Earnings Losses and Estimated
Effectiveness of Wage Insurance in Reducing
Earnings Losses 184
10.4 Estimated Effectiveness of TAA-funded Training
in Reducing Earnings Losses 187
11.1 Trade Opinions, by Country 194
11.2 Loss Aversion, Follows International News, and
Educational Attainment, by Country 208
11.3 ª Trade is Goodº Frequencies, by Education and
Loss-averse Classifications 212
12.1a Descriptive Statistics, Trade Opinion Variables 217
12.1b Descriptive Statistics, Explanatory Variables 220