Showing papers by "Robert C. Feenstra published in 1996"

Globalization, Outsourcing, and Wage Inequality

Abstract: There is considerable debate over whether international trade has contributed to the declining economic fortunes of less skilled workers One issue that has become lost in the current discussion is how firms respond to import competition and how these responses, in turn, are transmitted to the labor market In previous work, we have argued that outsourcing, by which we mean the import of intermediate inputs by domestic firms, has contributed to an increase in the relative demand for skilled labor in the United States If firms respond to import competition from low-wage countries by moving non- skill-intensive activities abroad, then trade will shift employment towards skilled workers within industries In this paper, we extend our previous work by combining new import data from the revised NBER trade database with disaggregated data on input purchases from the Census of Manufactures We construct industry-by-industry estimates of outsourcing for the period 1972-1990 and reexamine whether outsourcing has contributed to an increase in relative demand for skilled labor Our main finding is that outsourcing can account for 31-51% of the increase in the relative demand for skilled labor that occurred in US manufacturing industries during the 1980s, compared to our previous estimate of 15-33%

Globalization, Outsourcing, and Wage Inequality

Abstract: There is considerable debate over whether international trade has contributed to the declining economic fortunes of less skilled workers. One issue that has become lost in the current discussion is how firms respond to import competition and how these responses, in turn, are transmitted to the labor market. In previous work, we have argued that outsourcing, by which we mean the import of intermediate inputs by domestic firms, has contributed to an increase in the relative demand for skilled labor in the United States. If firms respond to import competition from low-wage countries by moving non- skill-intensive activities abroad, then trade will shift employment towards skilled workers within industries. In this paper, we extend our previous work by combining new import data from the revised NBER trade database with disaggregated data on input purchases from the Census of Manufactures. We construct industry-by-industry estimates of outsourcing for the period 1972-1990 and reexamine whether outsourcing has contributed to an increase in relative demand for skilled labor. Our main finding is that outsourcing can account for 31-51% of the increase in the relative demand for skilled labor that occurred in U.S. manufacturing industries during the 1980s, compared to our previous estimate of 15-33%.

U.S. Imports, 1972-1994: Data and Concordances

Abstract: This paper describes data on U.S. imports from 1972-1994, classified according to the Tariff Schedule of the U.S. Annotated (TSUSA), Harmonized System (HS), Standard International Trade Classification (SITC, Revisions 2 and 3), and Standard Industrial Classification (SIC, 1972 basis), along with various concordances. All of these data sets are disaggregated by the source country for imports. These data are available on the CD-ROM: `NBER Trade Database, Disk 1: U.S. Imports, 1972-1994,' which can be ordered for $50 from the Publications Department, NBER, 1050 Massachusetts Avenue, Cambridge, MA 02138. The TSUSA and HS import data are at the most disaggregate level collected by the U.S. Census, and will be particularly useful for research on antidumping cases. The SITC import data will be valuable for those wanting to compare U.S. trade flows at a more aggregate level with comparable data for other countries. The SIC import data will be particularly useful for those wanting to study the effects of import competition on U.S. industries. A summary of the SIC data, which does not contain the source country detail and incorporates earlier years, is available via anonymous FTP from: nber.harvard.edu/pub/feenstra. A second CD-ROM, containing U.S. export data, will be released later in 1996.

The political economy of trade policy : papers in honor of Jagdish Bhagwati

Abstract: This collection of papers by former students and colleagues celebrates the profound impact that Jagdish Bhagwati has had on the field of international economics over the past three decades. Bhagwati, who is the Arthur Lehman Professor of Economics at Columbia University, has made pathbreaking contributions to the theory of international trade and commercial policy, including immiserizing growth, domestic distortions, economic development, and political economy. His success and influence as a teacher and mentor is widely recognized among students at both MIT and Columbia, and as founder of the Journal of International Economics, he has encouraged research on many questions of theoretical and policy relevance. The political economy of trade policy, Bhagwati's most recent area of interest, is the theme of this collection which addresses salient topics including market distortions, income distribution, and the political process of policy-making.Sections and Contributors: - Market Distortions. T. N. Srinivasan. Paul A. Samuelson. Paul R. Krugman.- Trade and Income Distribution. Douglas A. Irwin. Richard A. Brecher and Ehsan U. Choudri. Robert C. Feenstra and Gordon H. Hanson. Earl L. Grinols.- Perspectives on Political Economy. Robert E. Baldwin. Peter Diamond.- Models of Political Economy and Trade. Gene M. Grossman and Elhana Helpman. John Douglas Wilson. B. Peter Rosendorff. Arvind Panagariya and Ronald Findlay.

U.S. Imports, 1972-1994: Data and Concordances

Abstract: This paper describes data on U.S. imports from 1972-1994, classified according to the Tariff Schedule of the U.S. Annotated (TSUSA), Harmonized System (HS), Standard International Trade Classification (SITC, Revisions 2 and 3), and Standard Industrial Classification (SIC, 1972 basis), along with various concordances. All of these data sets are disaggregated by the source country for imports. These data are available on the CD-ROM: `NBER Trade Database, Disk 1: U.S. Imports, 1972-1994,' which can be ordered for $50 from the Publications Department, NBER, 1050 Massachusetts Avenue, Cambridge, MA 02138. The TSUSA and HS import data are at the most disaggregate level collected by the U.S. Census, and will be particularly useful for research on antidumping cases. The SITC import data will be valuable for those wanting to compare U.S. trade flows at a more aggregate level with comparable data for other countries. The SIC import data will be particularly useful for those wanting to study the effects of import competition on U.S. industries. A summary of the SIC data, which does not contain the source country detail and incorporates earlier years, is available via anonymous FTP from: nber.harvard.edu/pub/feenstra. A second CD-ROM, containing U.S. export data, will be released later in 1996.

Protectionist Threats and Foreign Direct Investment

Abstract: The recent literature on quid pro quo foreign direct investment (FDI) suggests that FDI may be induced by the threat of protection, and further, that FDI may be used as an instrument to defuse a protectionist threat. This paper uses a panel data set of 4-digit SIC level observations of Japanese manufacturing FDI into the United States in the 1980s to explore these hypotheses empirically. We find strong statistical support for the hypothesis that higher threats of protection lead to greater FDI flows, and post-regression simulations find that a rise in the expected probability of protection from five to ten percent means over a 30 percent rise in next-period FDI flows for an average industry. In addition, there is evidence that non- acquisition FDI by the Japanese had success in defusing the threat of an escape clause investigation in future periods.

Protectionist Threats and Foreign Direct Investment

Abstract: The recent literature on quid pro quo foreign direct investment (FDI) suggests that FDI may be induced by the threat of protection, and further, that FDI may be used as an instrument to defuse a protectionist threat. This paper uses a panel data set of 4-digit SIC level observations of Japanese manufacturing FDI into the United States in the 1980s to explore these hypotheses empirically. We find strong statistical support for the hypothesis that higher threats of protection lead to greater FDI flows, and post-regression simulations find that a rise in the expected probability of protection from five to ten percent means over a 30 percent rise in next-period FDI flows for an average industry. In addition, there is evidence that non- acquisition FDI by the Japanese had success in defusing the threat of an escape clause investigation in future periods.

Bias in U.S. Import Prices and Demand

Abstract: The purpose of the paper is to measure the potential bias in the US import price index due to the appearance of new product varieties, or new foreign suppliers, and determine the effect of this bias on the estimated income elasticity of import demand Existing import price indexes are based on a sample of products from importing firms We argue that if the share of import expenditure on the sampled products is falling over time, this will lead to an upward bias in the measured index Using a correction based on the falling expenditure share on sampled countries, we find that the income elasticity of aggregate US import demand is reduced from 25 to 17, or about halfway to unity Our estimates suggest that the aggregate import price index is upward biased by about one and one-half percentage points annually

Globalization, Outsourcing, and Wage Inequality

Abstract: There is considerable debate over whether international trade has contributed to the declining economic fortunes of less skilled workers. One issue that has become lost in the current discussion is how firms respond to import competition and how these responses, in turn, are transmitted to the labor market. In previous work, we have argued that outsourcing, by which we mean the import of intermediate inputs by domestic firms, has contributed to an increase in the relative demand for skilled labor in the United States. If firms respond to import competition from low-wage countries by moving non- skill-intensive activities abroad, then trade will shift employment towards skilled workers within industries. In this paper, we extend our previous work by combining new import data from the revised NBER trade database with disaggregated data on input purchases from the Census of Manufactures. We construct industry-by-industry estimates of outsourcing for the period 1972-1990 and reexamine whether outsourcing has contributed to an increase in relative demand for skilled labor. Our main finding is that outsourcing can account for 31-51% of the increase in the relative demand for skilled labor that occurred in U.S. manufacturing industries during the 1980s, compared to our previous estimate of 15-33%.