Survival of the Best Fit: Exposure to Low-Wage Countries and the (Uneven) Growth of U.S. Manufacturing Plants ∗

By J. B. Jensen, Andrew B. Bernard, Peter K. Schott. 2003

228 citations recorded by the source corpus.

This paper examines the role of international trade in the reallocation of U.S. manufacturing within and across industries from 1977 to 1997. Motivated by the factor proportions framework, we introduce a new measure of industry exposure to international trade that focuses on where imports originate rather than on their overall level. We find that plant survival and growth are negatively associated with industry exposure to low-wage country imports. Within industries, we show that manufacturing activity is disproportionately reallocated towards capital-intensive plants. Finally, we provide the first evidence that firms adjust their product mix in response to trade pressures. Plants are more likely to switch industries when exposure to low-wage countries is high.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/609e784c291615b18b122d6374ed5d94075de40c

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

Citations in the corpus

Estimating the Impact of Trade and Offshoring on American Workers using the Current Population Surveys (2011, unknown): “Bernard, Jensen, and Schott (2006), in the first paper to distinguish between imports from high-income versus low-income countries, find that only low-income imports negatively affected firm exit, survival, and employment growth.”
New Perspectives on the Decline of US Manufacturing Employment (2018, background): “Bernard et al. (2006), for example, nd that US manufacturing plant survival and employment between 1977 and 1997 are negatively associated with increasing import penetration from low-wage countries.”
Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China? (2015, background): “, the survey by Bernard et al. (2012)). Most of these papers analyze the unconditional effect of trade shocks on various dimensions of firm performance such as employment and wages (Revenga (1992)), output and survival (Bernard, Jensen and Schott (2006)), cost of debt (Valta (2012)), leverage (Xu (2”
US exports and employment (2019, unknown): “Columns (1) to (5) of Table 5 use CBP data while columns (6)-(10) use NBER-CES database.”
The Effect of Low-Wage Import Competition on U.S. Inflationary Pressure (2010, methodology): “The analysis follows Bernard et al. (2006) in defining low-wage import competition as the expenditure share of imports from the nine LWCs divided by total U.S. sales.”
The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade (2016, methodology): “Bernard et al. (2006) use data on US manufacturing plants for 1977 to 1997 to examine the consequences of increased exposure to import competition from low-wage countries, which they measure as the share of these economies in US imports, and which is largely attributable to China.22 They find that…”
Industry Dynamics and Competition from Low-Wage Countries: Evidence on Italy (2014, unknown): “A similar specification is used by Khandelwal (2010) and, with firm-level data, by Bernard et al. (2006).”
The China Syndrome: Local Labor Market Effects of Import Competition in the United States (2013, background): “This approach is taken in recent work focusing on US imports from low-income countries, including Bernard, Jensen, and Schott (2006), who find that over 1977–1997, manufacturing plants more exposed to low-wage-country imports grew more slowly and were more likely to exit, and Liu and Trefler…”
The Empirics of Firm Heterogeneity and International Trade (2012, background): “However, similar patterns of productivity gains from the expansion of high-productivity exporting rms have been found in response to reductions in trade barriers in both Canada (Tre er, 2004) and the United States (Bernard et al. 2006a).”