Trade Liberalization, Unemployment and Adjustment: Evidence from NAFTA Using State Level Data
32 Pages Posted: 19 Jul 2009
Date Written: July 16, 2009
This paper specifies a supply and demand model of the labor market to examine the effects of NAFTA on the US labor market. Regression results suggest that NAFTA decreased yearly unemployment growth by 4.4%. Equivalently, NAFTA brought a structural break to US state level unemployment. The second finding is that the labor market began feeling the impact of NAFTA immediately after its implementation and the labor market has continued to feel its effects probably through 2001.
Keywords: NAFTA, unemployment, state, adjustment period
JEL Classification: F16, J64, C33
Suggested Citation: Suggested Citation