Foreign competition and technological change might seem like twin juggernauts, destroying American manufacturing jobs in much the same way. In fact, they’re quite different.
Foreign competition from China can be like a tornado, devastating US manufacturing in concentrated fashion but in limited areas around the country, according to a new study from the National Bureau of Economic Research (NBER). The winds of technological change blow much more broadly and less destructively, displacing typically middle-income jobs but creating more low-paying and high-paying positions.
There’s another major difference: As of 2007, at least, the foreign competition tornado was growing bigger and threatening more manufacturing jobs; the winds of technological change are lessening in the manufacturing sector and have moved on to nonmanufacturing industries.
“Outside of manufacturing … the impact of automation accelerates during the three decades of our sample, suggesting that computerization of information processing activities in knowledge-intensive industries continues to intensify,” conclude economists David Autor of the Massachusetts Institute of Technology, David Dorn of Spain’s graduate education institute CEMFI in Madrid, and Gordon Hanson of the University of California at San Diego, the authors of the NBER study.
They compare the effects of trade competition stemming from rising Chinese imports with the impact of computerization in local labor markets – specifically, 722 commuting zones (CZs) that make up the mainland United States from 1990 to 2007.
Chosen excerpts by Job Market Monitor