This research examines whether state industrial growth over the past decade has occurred independently of changes in manufacturing exports and whether export employment growth responds to the same economic and locational forces as employment growth in domestic production. The empirical results indicate that employment and value added growth are not independent of export sales growth; however, a shift toward export markets is not strongly associated with higher manufacturing growth rates. Traditional factors account for a far greater proportion of the variation in domestic than export employment growth. The results suggest the need for additional research on the sources of state comparative advantage in export markets.
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Regional Income Inequality and International Trade
July 2003
Working Paper Number:
CES-03-15
International trade is frequently cited as a cause of rising income inequality between individuals and across countries. Less attention has been paid to the effects of trade on inequality across regions within countries. Trade may enhance regional inequalities due to differences in regional trade involvement and in the prices of export and import-competing goods produced in different regions. This study investigates the effects of trade on income inequality across regions in the United States. Using both structural and price-based measures of regional trade involvement, we evaluate the effects of trade on inequality within and across states, the metro and nonmetro portions of the states, and the major Census regions. Across all states and across metro and nonmetro areas, we find that trade affects inequality primarily via import and export prices. In contrast to our expectations, however, a weaker dollar '''more expensive imports and cheaper exports ''' is associated with a worsening of a state'''s position relative to other states, and greater inequality within a state. Across the Census regions, both our price and measures had significant effects, but the direction of these effects varied by region. Whereas most regions benefited from cheaper imports, states located in regions that are traditionally home to low-wage sectors, including the Southeast and South Central regions, were made relatively worse off by lower import prices and by greater orientation toward import-competing goods. Our findings reinforce notions about the uneven impacts of globalization and suggest that policy measures are needed to ensure that both the benefits and costs of international trade involvement are shared across regions.
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International Trade, Employment, and Earnings: Evidence from U.S. Rural Counties
May 2003
Working Paper Number:
CES-03-12
Rural manufacturers in the United States are considered highly vulnerable to competition from international imports. Yet only limited empirical attention has been paid to the effects of trade on U.S. rural economies. This paper investigates the effects of international trade on U.S. rural manufacturing economies and compares the effects of trade pressures in rural versus urban areas. Our results indicate that lower export prices are associated with increased manufacturing employment and earnings in both rural and urban counties, while lower import prices are associated with reduced rural employment but increased urban employment. Greater export orientation is associated with lower employment and earnings in both rural and urban counties, while import orientation has mixed effects.
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International Trade and the Changing Demand for Skilled Workers in High-Tech Manufacturing
August 2007
Working Paper Number:
CES-07-22
This paper examines the effects of changing trade pressures on the demand for skilled workers in high-tech and traditional manufacturing industry groupings and in individual high-tech sectors. For industry groupings, changing import and export prices have mixed effects, with coefficients switching signs between wage share and employment share models. These findings suggest that changes in earnings and employment of skilled workers are not moving in the same direction in response to shifting trade pressures. For individual high-tech sectors, both price and orientation measures had significant effects, but the direction of these effects varied substantially by sector.
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R&D Reactions To High-Technology Import Competition
March 1991
Working Paper Number:
CES-91-02
For a seventeen-year panel covering 308 U.S. manufacturing corporations, we analyze firms' R&D spending reactions to changes in high-technology imports. On average, companies reduced their R&D/sales ratios in the short run as imports rose. Individual company reactions were heterogeneous, especially for multinational firms. Short-run reactions were more aggressive (i.e., tending toward R&D/sales ratio increases), the more concentrated the markets were in which the companies operated, the larger the company was, and the more diversified the firm's sales mix was. Reactions were less aggressive when special trade barriers had been erected or patent protection was strong in the impacted industries. Companies with a top executive officer educated in science or engineering were more likely to increase R&D/sales ratios in response to an import shock, all else equal. Over the full 17-year sample period, reactions may have shifted toward greater average aggressiveness.
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Tracing the Sources of Local External Economies
August 2004
Working Paper Number:
CES-04-13
In a cross-sectional establishment-level analysis using confidential secondary data, I evaluate the influence of commonly postulated sources of localized external economies'supplier access, labor pools, and knowledge spillovers'on the productivity of two U.S. manufacturing sectors (farm and garden machinery and measuring and controlling devices). Measures incorporating different distance decay specifications provide evidence of the spatial extent of the various externality sources. Chinitz's (1961) hypothesis of the link between local industrial organization and agglomeration economies is also investigated. The results show evidence of labor pooling economies and university-linked knowledge spillovers in the case of the higher technology measuring and controlling devices sector, while access to input supplies and location near centers of applied innovation positively influence efficiency in the farm and garden machinery industry. Both sectors benefit from proximity to producer services, though primarily at a regional rather than highly localized scale.
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The Rural-Urban Gap In Manufacturing Productivity And Wages: Effects Of Industry Mix And Region
June 1997
Working Paper Number:
CES-97-06
This study analyzes urban and rural values of value added per worker and production worker wages tabulated from unpublished 1992 Census of Manufactures data. A decomposition of regional averages separates out effects of regional industry mix from within-industry differentials over a rural-urban continuum and for metro and nonmetro portions of census regions. Comparison of actual 1991-1993 employment growth with regional wage and productivity differentials shows that low wages are strongly associated with job growth.
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Manufacturing Plant Location: Does State Pollution Regulation Matter?
July 1997
Working Paper Number:
CES-97-08
This paper tests whether differences across states in pollution regulation affect the location of manufacturing activity in the U.S. Plant-level data from the Census Bureau's Longitudinal Research Database is used to identify new plant births in each state over the 1963-1987 period. This is combined with several measures of state regulatory intensity, including business pollution abatement spending, regulatory enforcement activity, congressional pro-environment voting, and an index of state environmental laws. A significant connection is found: states with more stringent environmental regulation have fewer new manufacturing plants. These results persist across a variety of econometric specifications, and the strongest regulatory coefficients are similar in magnitude to thos4e on other factors expected to influence location, such as unionization rates. However, a subsample of high-pollution industries, which might have been expected to show much larger impacts, gets similar coefficients. This raises the possibility that differences between states other than environmental regulation might be influencing the results.
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Civic Community in Small-Town America: How Civic Welfare is Influenced by Local Capitalism and Civic Engagement
December 2001
Working Paper Number:
CES-01-19
The aims of this paper are twofold: first, to gain a fuller understanding of factors that foster community cohesion and contribute to the residents' social and economic well-being; and, second, to move beyond previous research that used larger spatial units such as states, counties, or aggregates of counties and to focus instead on American small towns (population 2,500-20,000). The data on small towns are drawn from public-use files and from confidential microdata from various economic censuses. From these sources we construct measures of locally oriented firms, self-employment, business establishments that serve as gathering places, and associations. The local capitalism and civic engagement variables generally perform as hypothesized; in some cases they are related quite strongly to civic welfare outcomes such as income levels, poverty rates, and nonmigration rates. We discuss the advantages and disadvantages of working with place-level data and suggest some strategies for subsequent work on small towns and other incorporated places.
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The Determinants of U.S. Intra-Industry Trade
December 1990
Working Paper Number:
CES-90-13
Responses from the Yale University survey of 650 research and development executives were linked to U.S. trade statistics at the four-digit SIC level for the years 1965-85 to test several hypotheses concerning intra-industry trade. A new index of intra-industry trade was developed to capture both the level and balance dimensions of import and export flows. Intra-industry trade is found to be more extensive, the higher industry R&D/sales ratios were, the more important economies of learning-by-doing were, and greater the relevance of academic engineering research was, and the more niche-filling strategies were emphasized in new product development. When firms oriented their R&D efforts toward meeting the specialized demands of individual customers, intra-industry trade was lower. The highest levels of intra-industry trade were found in loosely oligopolistic industries.
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A Flexible Test for Agglomeration Economies in Two U.S. Manufacturing Industries
August 2004
Working Paper Number:
CES-04-14
This paper uses the inverse input demand function framework of Kim (1992) to test for economies of industry and urban size in two U.S. manufacturing sectors of differing technology intensity: farm and garden machinery (SIC 352) and measuring and controlling devices (SIC 382). The inverse input demand framework permits the estimation of the production function jointly with a set of cost shares without the imposition of prior economic restrictions. Tests using plant-level data suggest the presence of population scale (urbanization) economies in the moderate- to low-technology farm and garden machinery sector and industry scale (localization) economies in the higher technology measuring and controlling devices sector. The efficiency and generality of the inverse input demand approach are particularly appropriate for micro-level studies of agglomeration economies where prior assumptions regarding homogeneity and homotheticity are less appropriate.
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