NAFTA 10년과 미국시장에서 한국과 멕시코의 · 2006. 5. 26. · nafta 10년과 미국시장에서 한국과 멕시코의 경쟁력 1 1 nafta 10년과 미국시장에서
NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement...
Transcript of NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement...
![Page 1: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/1.jpg)
NAFTA and US employment
Mingming Pan
Department of Economics
![Page 2: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/2.jpg)
Questions
• Any one of you thinks NAFTA has affected US employment?
• Any one of you thinks the effect is negative?
• Any one of you thinks the effect is positive?
• Anyone has personally been affected by NAFTA?• Would you like to share your story?
![Page 3: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/3.jpg)
NAFTA
• North American Free Trade Agreement
• Involves 3 member countries
• To remove trade barriers and facilitate cross-border investment
• Enacted in 1994
• 15-year phase-in period• Roughly half of North American trade was liberalized immediately upon the
agreement taking effect while the remainder of existing tariffs were phased out over 5, 10 and 15 year periods.
![Page 4: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/4.jpg)
Major Concern of NAFTA
• Job displacement
“Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –Robert Scott, Economic Policy Institute, D.C.
• Some flaws in such calculations• Consider: Increase in purchasing power
• Consider: Intermediate goods become less inexpensive for some domestic producers
• Is NAFTA responsible for the whole trade deficit?• In 1986, Mexico became a member of GATT (predecessor of WTO)
• Peso depreciation since the peso crisis in Dec 1994
• Let’s look at some data
![Page 5: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/5.jpg)
Trade deficit with Mexico
-1E+10
0
1E+10
2E+10
3E+10
4E+10
5E+10
6E+10
7E+10
8E+10
9E+10
1985 1990 1995 2000 2005 2010 2015 2020
![Page 6: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/6.jpg)
Exchange rate peso/$
0
2
4
6
8
10
12
14
16
18
1985 1990 1995 2000 2005 2010 2015 2020
![Page 7: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/7.jpg)
Total employment (blue line)Employment for people with intermediate education (grey line)Employment for people with advanced education (red line)
0
20000
40000
60000
80000
100000
120000
140000
160000
1990 1995 2000 2005 2010 2015 2020
![Page 8: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/8.jpg)
Employment for people with basic education
0
500
1000
1500
2000
2500
3000
3500
1990 1995 2000 2005 2010 2015 2020
![Page 9: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/9.jpg)
![Page 10: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/10.jpg)
![Page 11: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/11.jpg)
Trade Theory (Heckscher-Ohlin)
• H-O theorem states that a country will export goods that use its abundant factors intensively, and import goods that use its scarce factors intensively.• Different countries have different factor (resource) endowments.
• Different industries use different factor-use intensity
• Comparative advantage: lower cost of producing a good
• E.g. A capital-abundant country will export the capital-intensive good, while the labor-abundant country will export the labor-intensive good.
• Mexico has lower wage rate, does it mean that is has lower cost in producing everything??
![Page 12: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/12.jpg)
Trade Theory (Heckscher-Ohlin)• Various effects on various industries
• Employment and wage rates in export-oriented industries• Employment and wage rates in import-competing industries• The practice of multinational enterprises
• Location effects (Youngstown effect)• Locations concentrated with import-competing industries• Wage rates in non-tradable sectors will be affected too!
• Long-run effect on employment and real income• Owner of the abundant resource earns a higher real income• Owner of the scarce resource earns a lower real income• Take a look at the employment figures again
• Free trade always benefit some and hurt some others.
• Trade Assistance Programs
![Page 13: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/13.jpg)
The positive effects
• Lower import price, raises purchasing power of US people, creating more demand
• Lower import price on intermediate goods means lower input price for some producers, increasing competitiveness
• Production networks improves production efficiency and creates jobs
• A stronger Mexican economy boosts US exports
• Overall welfare gains?
![Page 14: NAFTA and US employment - Wright State University · Major Concern of NAFTA •Job displacement “Growth of the US trade deficit with Mexico displaced 903,200 jobs 1993-2013” –](https://reader033.fdocuments.in/reader033/viewer/2022050105/5f4379c335e551794a0c7074/html5/thumbnails/14.jpg)
Thank You!