| Abstract: |
This paper finds a link between the sharp drop in U.S. manufacturing
employment after 2001 and the elimination of trade policy uncertainty
resulting from the U.S. granting of permanent normal trade relations to China
in late 2000. We find that industries where the threat of tariff hikes
declines the most experience greater employment loss due to suppressed job
creation, exaggerated job destruction and a substitution away from low-skill
workers. We show that these policy-related employment losses coincide with a
relative acceleration of U.S. imports from China, the number of U.S. firms
importing from China, the number of Chinese firms exporting to the U.S., and
the number of U.S.-China importer-exporter pairs. |