As election season rhetoric intensifies, it may be useful to review the latest findings of a gathering of academic, nonpartisan researchers with much experience in the area of international trade and job loss. Three recently-published books from the Upjohn Institute, authored by such researchers, examine the impacts of international trade and exchange rate policies on the U.S. labor market. In addition, all three books stress the importance of job training in order to help workers (and companies) acquire the skills necessary to make the transition prompted by trade-induced job reallocation.

Two related volumes offer additional insights into the changing labor markets in industrialized nations. One describes how nonstandard work practices are becoming more prevalent in developed economies while the other examines the means being used to assist displaced workers in industrialized nations.

Job Creation, Job Destruction,
and International Competition

The authors present a picture of how the effects of international trade on employment in U.S. manufacturing industries vary widely. They explore the labor-market dynamics and adjustment costs associated with international factors, particularly the way fluctuations in exchange rates, overseas economic activity, and the altering of trade restrictions contribute to churning--the simultaneous job creation among some firms and job destruction among others. The documentation of the disparate effects between and even within narrowly defined industries shows that churning characterizes the labor markets for manufacturing industries, and that changes in international factors have a much larger and more complex impact on labor markets than was previously thought.

While a number of factors add to the complexity of drawing conclusions about the effects of free trade pacts such as NAFTA on the U.S. labor market, Klein, Schuh, and Triest do find that trade liberalization may generate economic effects that are much like permanent changes in real exchange rates. This is because both impact the prices of goods produced in the U.S. relative to goods produced abroad.

International Trade and Labor Markets

Theory, Evidence, and Policy Implications

Davidson and Matusz develop simple yet compelling models that allow for documented differences in labor markets across countries in order to investigate the impact of trade and trade policies on society's underclass. These are based on several micro-based models of unemployment that have emerged over the past 30 years, and they allow the authors to account for differing degrees of labor-market flexibility. The models allow examination of the impact on the poor of trade's effects on job opportunities and on the distribution of income when unemployment is present.

The same models are then used to study the relative merits of policies such as trade adjustment assistance, wage subsidies for dislocated workers, job training subsidies, and other policies aimed at helping workers displaced by changes in the pattern of trade.

Imports, Exports, and Jobs

What Does Trade Mean for Employment and Job Loss?

Kletzer finds that free trade pacts, such as NAFTA, can and do facilitate economic growth, but open engagement with the world does not help everyone. Manufacturing industries offer striking differences in their sensitivities of employment change and job loss to changes in trade flows. Rising imports are associated with job loss. That the numbers may be small, or that they are associated with a particular set of industries does not diminsh the extent of human costs. Proponents of expanded open trade and investment, she concludes, face an obligation to address the concerns of workers, companies, and communities who can be hurt by free trade.

Nonstandard Work in Developed Economies

Causes and Consequences

This book reveals the considerable variation in the levels of growth in a broad set of nonstandard work arrangements while presenting a comprehensive view of how, as a result, the nature of the employment relationship is changing within and among countries.

Overall, this book will be useful for anyone seeking to gain a better understanding of the trends in nonstandard work arrangements including factors influencing their size and growth, their impact on women, and their implications for employees' job security, pay, and benefits.

Losing Work, Moving On

International Perspectives on Worker Displacement

This volume presents a collaborative effort by 22 labor economists who examine worker displacement and the attempts to address it in 10 industrialized countries. Using large nationally-representative data sets and detailed policy analysis, the authors focus on two key questions related to worker displacement: 1) whether the experiences of displaced workers in the Untied States, and the patterns of experiences across workers, echo patterns seen in other developed countries, and 2) what can be learned, both from the similarities and from the differences across countries?