Abstract
We use factor content analysis to measure the employment effects of manufacturing trade expansion over 1978-1995 compared to a counterfactual of no manufacturing trade expansion for ten OECD countries. We find that trade brought a net "loss" of 3.3 million jobs, 2.0 million of these in the United States alone, a number considerably higher than that found in Sachs and Shatz (1994) for the period 1978-1990. We then consider trade within and outside the OECD, and find that most of the net loss is accounted for by trade expansion with non-OECD countries and is concentrated in labour-intensive industries. At the same time, the decline in the manufacturing share of total employment ("deindustrialization") is more highly correlated with the employment effects from trade with other OECD countries rather than with the non-OECD countries. We propose that this is due to the high correlation of intra-OECD trade with economic activity generally. Moreover, the employment "losses" from non-OECD trade were not largely the result of surging import penetration from low-wage countries, but of a decline in exports to these low-income markets especially in the aftermath of the debt crisis in the 1980s.