RecensionsBook Reviews

Imports, Exports, and Jobs. What Does Trade Mean for Employment and Job Loss? by Lori G. Kletzer, Kalamazoo, Michigan: W.E. Upjohn Institute for Employment Research, 2002, 221 pp., ISBN 0-88099-247-6.[Record]

  • Patricia M. Anderson

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  • Patricia M. Anderson
    Dartmouth College

In this book, the author takes on an important and timely question: what does trade mean for employment and job loss? The short answer is that while there is a positive correlation between increased imports and job loss, the popular press focus on this aspect of trade ignores the correlation between increased exports and job growth. As a result, the naive policy prescription of restricting imports will likely also result in export reductions, which will themselves lead to job loss. The author notes that, instead, the policy implication of these findings is less one of trade policy, than one of labour market policy. That is, that while the overall effects of increased trade are positive, individual workers will suffer from job displacement and can benefit from such things as unemployment extensions and job search and training assistance. The book begins with an overview chapter that lays out the basic argument referred to above. Chapter 2 is likely to be especially useful for the average labour economist, who is typically not up on the details of trade theory. In this chapter, the author outlines the basics of such things as Heckscher-Ohlin theory, the Stolper-Samuelson theorem and factor-price equalization. While this is all second nature for the trade economist, I found it useful to have it all laid out in one place like this. The chapter continues by discussing extensions to these models (e.g. “new” trade theory) and by reviewing different ways to empirically measure trade. Chapter 3 then moves ahead with a review of the existing literature on globalization and labour markets. In line with the previous chapter, the review is organized in terms of both the theoretical models motivating it and the choice of trade measure. Again, from a labour economist perspective, it was useful to see the literature that comes from the trade perspective clearly discussed. Most labour economists are likely to be mainly familiar with work which is focused more broadly on increasing inequality, using the effect of trade on wages as one aspect of the question. In fact, this is the majority of the literature, with papers focusing on employment or job loss being in a clear minority. As a result, the more detailed analysis of employment and job displacement which follows is welcome. The first step in the empirical analysis is Chapter 4, which is a descriptive look at trends in trade, employment and job loss. The study is limited to manufacturing between 1979 and 1994, and within manufacturing, across industry differences are explored using 3-digit CIC industry. While the univariate tables reveal some patterns in which greater import penetration appears associated with greater employment loss, simple descriptives are generally not overly persuasive. Thus, the rest of the book focuses on carefully modeling the relationship between imports, exports and jobs. Chapter 5 presents the empirical model of industry employment (or job loss) and trade. The model is partial equilibrium and generally straightforward. The casual reader will probably be no worse off simply skimming the details and plunging right into the reduced form estimates of Chapter 6 and 7. However, for the academic reader, it is useful to go through the derivations, and bear in mind the assumptions and caveats while reviewing the results. The meat of the book is found in Chapters 6 and 7. The main models include industry and year effects, and investigate the effect of various measures of trade on industry employment (or job displacement). The first model simply uses the change in ln(sales), while another splits this up into changes in domestic demand, exports and imports. Additionally, imports are further subdivided into …