Skip to main content

Trading away what kind of jobs? Globalization, trade and tasks in the US economy

Review of World Economics volume 148, pages 1–16 (2012)Cite this article

Abstract

Economists and other social scientists are calling for a reassessment of the impact of international trade on labor markets in developed and developing countries. Classical models of globalization and trade, based upon the international exchange of finished goods, fail to capture the fragmentation of much commodity production and the geographical separation of individual production tasks. This fragmentation, captured in the growing volume of intra-industry trade, prompts investigation of the effects of trade within, rather than between, sectors of the economy. In this paper we examine the relationship between international trade and the task structure of US employment. We link disaggregate US trade data from 1972 to 2006, the NBER manufacturing database, the Decennial Census, and occupational and task data from the Dictionary of Occupational Titles. Within-industry shifts in task characteristics are linked to import competition and technological change. Our results suggest that trade has played a major role in the growth in relative demand for nonroutine tasks, particularly those requiring high levels of interpersonal interaction.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

43,34 €

Price includes VAT (Finland)
Tax calculation will be finalised during checkout.

Fig. 1
Fig. 2

Notes

  1. Authors’ calculations from US import data available from the Center for International Data at UC Davis.

  2. Trade in services is an area of growing importance. US service imports have nearly tripled since 1992, and they accounted for 15% of total imports in 2005 (Bureau of Economic Affairs 2010). Though their exclusion may affect overall results, data on service trade remain far too aggregate at this time for the kind of analytical approach pursued here.

  3. Fulltime work is defined as at least 35 hours each week on average. We define full year employment to mean at least 48 weeks each year.

  4. In 1998, the DOT was replaced by the Occupational Information Network, or O*Net. O*Net represents not simply an update but a change in general approach, responding to criticisms ranging from excessive focus on tasks, measurement problems, and inadequate focus on nonmanufacturing industries. For the purpose of this particular project however, task emphasis and a manufacturing focus are less problematic. Moreover, O*Net is not appropriate to the kind of time series analysis performed in this investigation. For a fuller discussion of the strengths and weaknesses of DOT, see Cain and Treiman (1981) and Peterson et al. (2001).

References

  • Acemoglu, D. (2003). Patterns of skill premia. Review of Economic Studies, 70(2), 199–230.

    Article  Google Scholar 

  • Autor, D., Levy, F., & Murnane, R. (2003). The skill content of recent technological change: An empirical exploration. Quarterly Journal of Economics, 118(4), 1279–1334.

    Article  Google Scholar 

  • Baldwin, R. (2006). Globalisation: The great unbundling(s). Mimeo: Prime Minister’s Office, Economic Council of Finland.

    Google Scholar 

  • Baldwin, R., & Cain, G. (2000). Shifts in relative US wages: The role of trade, technology, and factor endowments. Review of Economics and Statistics, 82(4), 580–595.

    Article  Google Scholar 

  • Baldwin, R., & Robert-Nicoud, F. (2007). Offshoring: General equilibrium effects on wages, production and trade. (NBER Working Paper 12991). Cambridge, MA: National Bureau of Economic Research.

  • Bardhan, A., & Kroll, C. (2003). The new wave of outsourcing. (Fisher Center Report Series No. 1103). Berkeley: Fisher Center for Real Estate & Urban Economics, UC.

  • Baum, C., Schaffer, M., & Stillman, S. (2007). Enhanced routines for instrumental variables/GMM estimation and testing. Stata Journal, 7(4), 465–506.

    Google Scholar 

  • Becker, S., Ekholm, K., & Muendler, M. (2008). Offshoring and the onshore composition of occupations, tasks and skills. Mimeo: Ifo Institute for Economic Research, Munich.

    Google Scholar 

  • Berman, E., Bound, J., & Griliches, Z. (1994). Changes in the demand for skilled labor within US manufacturing: Evidence from the annual survey of manufacturers. The Quarterly Journal of Economics, 109(2), 367–397.

    Article  Google Scholar 

  • Blinder, A. (2006). Offshoring: The next industrial revolution. Foreign Affairs, 85(2), 113–128.

    Article  Google Scholar 

  • Blinder, A. (2007). How many US jobs might be offshorable? (Working Papers).

  • Blinder, A., & Krueger, A. (2009). Alternative measures of offshorability: A survey approach. (CEPS Working Paper 190). Princeton, NJ: Center for Economic Policy Studies.

  • Borjas, G., Freeman, R., & Katz, L. (1992). On the labor market effects of immigration and trade. In G. Borjas & R. Freeman (Eds.), Immigration and the Workforce (pp. 213–244). Chicago: Chicago University Press.

    Google Scholar 

  • Bureau of Economic Affairs (2009). Trade in services: 1992–2007. http://www.bea.gov/international/intlserv.htm Retrieved February 29, 2009.

  • Bureau of Economic Affairs (2010). Trade in goods and services. http://www.bea.gov/international/index.htm, Retrieved November 22, 2010.

  • Bustos, P. (2007). The impact of trade on technology and skill upgrading evidence from Argentina. (Working Paper 1189). Departamento de Economía y Empresa, Universitat Pompeu Fabra.

  • Cain, P., & Treiman, D. (1981). The dictionary of occupational titles as a source of occupational data. American Sociological Review, 46(3), 253–278.

    Article  Google Scholar 

  • Ebenstein, A., Harrison, A., McMillan, M., Phillips, S., & Hall, G. (2009). Estimating the impact of trade and offshoring on american workers using the current population surveys. (NBER Working Paper 15107). Cambridge, MA: National Bureau of Economic Research.

  • Ekholm, K., & Midelfart, K. (2005). Relative wages and trade-induced changes in technology. European Economic Review, 49(6), 1637–1663.

    Article  Google Scholar 

  • Ekholm, K., & Ulltveit-Moe, K. (2007). A new look at offshoring and inequality: Specialization versus competition. (CEPR Discussion Paper 6402). London: Centre for Economic Policy Research.

  • Feenstra, R. (2008). Offshoring in the global economy (The Ohlin Lectures 2008). Stockholm: Stockholm School of Economics.

    Google Scholar 

  • Feenstra, R., & Hanson, G. (1996). Globalization, outsourcing, and wage inequality. American Economic Review, 86(2), 240–245.

    Google Scholar 

  • Feenstra, R., & Hanson, G. (2001). Global production sharing and rising inequality: A survey of trade and wages. (NBER Working Paper 8372). Cambridge, MA: National Bureau of Economic Research.

  • Feenstra, R., Romalis, J., & Schott, P. (2002). U.S. imports, exports, and tariff data, 1989–2001. (NBER Working Paper 9387). Cambridge, MA: National Bureau of Economic Research.

  • Freeman R. (1995). Are your wages set in Beijing? The Journal of Economic Perspectives, 9(3), 15–32.

    Article  Google Scholar 

  • Goos M., & Manning A. (2007). Lousy and lovely jobs: The rising polarization of work in Britain. The Review of Economics and Statistics, 89(1), 118–133.

    Article  Google Scholar 

  • Grossman, G. & Rossi-Hansberg, E. (2006). The rise of offshoring: Its not wine for cloth anymore. In Federal Reserve Bank (Eds.), The new economic geography: Effects and Policy. Kansas City.

  • Grossman, G., & Rossi-Hansberg, E. (2008). Trading tasks: A simple theory of offshoring. American Economic Review, 98(5), 1978–1997.

    Article  Google Scholar 

  • Haskel, J., & Slaughter, M. (2001). Trade, technology and UK wage inequality. The Economic Journal, 111(468), 163–187.

    Article  Google Scholar 

  • Haskel, J., & Slaughter, M. (2002). Does the sector bias of skill-biased technical change explain changing skill premia? European Economic Review, 46(10), 1757–1783.

    Article  Google Scholar 

  • Jensen, J., & Kletzer, L. (2007). Measuring tradable services and the task content of offshorable services jobs. Unpublished manuscript. University of California, Santa Cruz, and Peterson Institute for International Economics, Washington, DC.

  • Jones, R., & Kierzkowski, H. (1990). The role of services in production and international trade: A theoretical framework. In M. Jones & A. Krueger (Eds.), The political economy of international trade. Oxford: Basil Blackwell.

    Google Scholar 

  • Kohler, W. (2008). Offshoring: Why do stories differ? (CESifo Working Paper 2232). Munich: Ifo Institute for Economic Research.

  • Krugman, P. (2008). Trade and wages, reconsidered. Brookings Papers on Economic Activity, 1, 103–154.

  • Lawrence, R. (2008). Blue-collar blues: Is trade to blame for rising US income inequality? Washington, DC: Peterson Institute for International Economics.

    Google Scholar 

  • Lawrence, R., Slaughter, M., Hall, R., Davis, S., & Topel, R. (1993). International trade and American wages in the 1980s: Giant sucking sound or small hiccup? Brookings Papers on Economic Activity. Microeconomics, 2, 161–226.

    Google Scholar 

  • Leamer, E. (1996). In search of Stolper–Samuelson effects on US wages. (NBER Working Paper 5427). Cambridge, MA: National Bureau of Economic Research.

  • Leamer, E. (2007). A flat world, a level playing field, a small world after all, or none of the above? A review of Thomas l. Friedman’s the world is flat. Journal of Economic Literature, 45(1), 83–126.

    Article  Google Scholar 

  • Leamer, E., & Storper, M. (2001). The economic geography of the internet age. Journal of International Business Studies, 32(4), 641–665.

    Article  Google Scholar 

  • Levy, F., & Murnane, R. (2004). The new division of labor: How computers are creating the next job market. Princeton: Princeton University Press.

    Google Scholar 

  • Markusen, J. (2005). Modeling the offshoring of white-collar services: From comparative advantage to the new theories of trade and FDI. (NBER Working Paper 11827). Cambridge, MA: National Bureau of Economic Research.

  • Mion, G., Vandenbussche, H., & Zhu, L. (2010). Trade with China and skill upgrading: Evidence from belgian firm level data. (LICOS Discussion Paper 248). Catholic University of Leuven.

  • Peterson, N., Mumford, M., Borman, W., Jeanneret, P., Fleishman, E., Levin, K., Campion, M., Mayfield, M., Morgeson, F., Pearlman, K., et al. (2001). Understanding work using the occupational information network (O*NET): Implications for practice and research. Personnel Psychology, 54(2), 451–492.

    Article  Google Scholar 

  • Robert-Nicoud, F. (2008). Offshoring of routine tasks and (de)industrialisation: Threat or opportunity—and for whom? Journal of Urban Economics, 63(2), 517–535.

    Article  Google Scholar 

  • Ruggles, S., Alexander, J., Genadek, K., Goeken, R., Schroeder, M., & Sobek, M. (2010). Integrated public use microdata series: Version 5.0. Minneapolis: Minnesota Population Center.

    Google Scholar 

  • Sachs, J., Shatz, H., Deardorff, A., & Hall, R. (1994). Trade and jobs in US manufacturing. Brookings Papers on Economic Activity, 1, 1–84.

  • Spitz-Oener, A. (2006). Technical change, job tasks, and rising educational demands: Looking outside the wage structure. Journal of Labor Economics, 24(2), 235–270.

    Article  Google Scholar 

  • Storper, M. (2009). Roepke lecture in economic geography: Regional context and global trade. Economic Geography, 85(1), 1–21.

    Article  Google Scholar 

  • Storper, M., & Venables, A. J. (2004). Buzz: Face-to-face contact and the urban economy. Journal of Economic Geography, 4(4), 351–370.

    Google Scholar 

  • U.S. Department of Labor. (1991). The revised handbook for analyzing jobs. Washington, DC: Government Printing Office.

  • Venables A. (2009). Rethinking economic growth in a globalizing world: An economic geography lens. African Development Review, 21(2), 331–351.

    Article  Google Scholar 

  • Verhoogen, E. (2008). Trade, quality upgrading, and wage inequality in the mexican manufacturing sector. Quarterly Journal of Economics, 123(2), 489–530.

    Article  Google Scholar 

  • Wood, A. (1994). North-South trade, employment and inequality: Changing fortunes in a skill-driven world. Oxford: Clarendon Press.

    Google Scholar 

  • Yeaple, S. (2005). A simple model of firm heterogeneity, international trade, and wages. Journal of International Economics, 65(1), 1–20.

    Article  Google Scholar 

  • Yi, K. (2003). Can vertical specialization explain the growth of world trade? Journal of Political Economy, 111(1), 52–102.

    Article  Google Scholar 

Download references

Acknowledgments

Funding for this project was provided by the Center for International Business Education and Research, UCLA Anderson School of Management and by the National Science Foundation under grant number 0961735. We thank Sebastien Breau, Michael Manville, Michael Storper, participants at the 2009 North American Regional Science Council conference, and an anonymous referee for comments that significantly improved the quality of this paper.

Author information

Affiliations

  1. Department of Public Policy, UNC Chapel Hill, Chapel Hill, NC, USA

    Thomas Kemeny

  2. Department of Geography, UCLA, Los Angeles, CA, USA

    David Rigby

Authors
  1. Thomas Kemeny
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. David Rigby
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Thomas Kemeny.

About this article

Cite this article

Kemeny, T., Rigby, D. Trading away what kind of jobs? Globalization, trade and tasks in the US economy. Rev World Econ 148, 1–16 (2012). https://doi.org/10.1007/s10290-011-0099-5

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10290-011-0099-5

Keywords

  • Offshoring
  • Task trade
  • Labor markets
  • Globalization

JEL Classification

  • F16
  • J21
  • L23