Trade and Manufacturing Employment

Paul Krugman has done a little digging into the effects of trade on manufacturing employment in the U.S. Overall, he concludes that,

How much of a role did trade play in the long-term decline in the manufacturing share of total employment, which fell from around a quarter of the work force in 1970 to 9 percent in 2015? The answer is, something, but not much.

Or to put it another way, absent the trade deficit manufacturing would be maybe a fifth bigger than it is – which is actually what EPI estimates too (Exhibit D in the linked paper). That wouldn’t make much difference to the long-run downward trend, but looms larger relative to the absolute decline since 2000.

Autor et al only estimate the effects of the China shock, which they suggest led to the loss of 985,000 manufacturing jobs between 1999 and 2011. That’s less than a fifth of the absolute loss of manufacturing jobs over that period, and a quite small share of the long-term manufacturing decline.

​I’m not saying that the effects were trivial: Autor and co-Autors show that the adverse effects on regional economies were large and long-lasting. But there’s no contradiction between that result and the general assertion that America’s shift away from manufacturing doesn’t have much to do with trade, and even less to do with trade policy.

From Business Insider, "To Krugman’s point, manufacturing employment peaked in 1979, before a significant number of the free trade agreements Trump blames for the decline."