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Abstract:
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In this paper, we explore the link between trade liberalization and labor market churning within the context of the North American Free Trade Agreement. We exploit the variation in tariff rates and non-tariff barriers over time to identify the effect of trade liberalization on labor churning within an industry. Specifically, we use the Trade Analysis and Information Systems (TRAINS) database from the United Nations and the Quarterly Census of Employment and Wages (QCEW) from the U.S. Bureau of Labor Statistics. We face some difficulty in distinguishing the effects of NAFTA from the peso devaluation that occurred from 1994 to 1995. To address this issue, we use a difference-in-differences approach, grouping U.S. states in terms of export volume to Canada and Mexico, to see how NAFTA differentially affected within-industry churning in states with high versus low export volumes.
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