New Perspectives on the Decline of US Manufacturing Employment

Abstract

We use relatively unexplored dimensions of US microdata to examine how US manufacturing employment has evolved across industries, firms, establishments and regions. These data provide support for both trade- and technology-based explanations of the overall decline of employment over this period, while also highlighting the difficulties of estimating an overall contribution for each mechanism. Toward that end, we discuss how more careful analysis of these trends might yield sharper insights.

Investment Responses to Trade Liberalization: Evidence from U.S. Industries and Establishments

“…To conserve space, we summarize the results of this regression in Figure 5, which plots the 90 percent condence interval associated with an interquartile shift in industry exposure to PNTR. As indicated in the gure, we nd that industries with greater exposure to PNTR exhibit greater declines in 10 Fort et al (2017) show that more than eighty percent of the decline in manufacturing employment between 1977 and 2012 is due to net establishment death.…”

“…The industry analysis serves as an important benchmark for our subsequent analysis of establishments because the expected impact of trade liberalization at the establishment-level is ambiguous: some plants may shrink or exit, lowering investment, while others may alter their production processes in ways that increase investment. Finally, motivated by models of investment under uncertainty, we investigate the timing, frequency, and lumpiness of establishments' investment before and after the change 1 Consider, for example, this anecdote from a recent article in the Wall Street Journal (Michaels (2017)), quoted in Fort et al (2017): When Drew Greenblatt bought Marlin Steel Wire Products LLC, a small Baltimore maker of wire baskets for bagel shops, he knew nothing about robotics. That was 1998, and workers made products manually using 1950s equipment... 2 In prior research (Pierce and Schott (2016)), we show that goods more exposed to PNTR exhibit substantial relative increases in U.S. imports from China as well as the number of U.S. rms that import from China, the number of Chinese rms that export to the United States, and the number of U.S.-Chinese rm pairs engaged in a trading relationship.…”

“…First, inclusion of plant xed eects in the establishmentlevel analysis means that identication is restricted to within-establishment variation, thereby excluding the impact of establishment exit, which is substantial during this period (Fort et al (2017) 12 Further discussion of the dierences between the industry-and plant-level results in appendix …”

Heterogeneity in the local employment multipliers in the United States

“…Our empirical analysis is based on the 3-digit NAICS level employment data published by the QCEW program. This may be attributed to the decline in employment in the manufacturing sector, which is a major component of the tradable sector (see, e.g., Fort, Pierce, & Schott, 2018;Houseman, 2018). The sample size was determined by the availability of data.…”

“…Overall, the relative share of employment in the tradable sector is smaller and appears to have decreased between 1995 and 2015 across all subsamples. This may be attributed to the decline in employment in the manufacturing sector, which is a major component of the tradable sector (see, e.g., Fort, Pierce, & Schott, 2018;Houseman, 2018). In addition, employment shares in both tradable and nontradable sectors differ across subsamples.…”