Working Paper 02-8
by Michael W. Klein, Scott Schuh, and Robert K. Triest

This paper is chapter 7 in our monograph, Job Creation, Job Destruction, and International Competition (W.E. Upjohn Institute for Employment Research 2003). The chapter, which expands on the ideas advanced in Klein, Schuh, and Triest (2003), is a case study of the impact of the North American Free Trade Agreement (NAFTA) on the U.S. labor market in three industries: textiles and apparel, chemicals, and automobiles. NAFTA significantly altered the trade environment for these industries and contributed to changes in the bilateral export-import structure among the United States, Canada, and Mexico. Our innovation is to examine NAFTA’s effect on gross job creation and destruction, the components of change in net employment. Except for a more rapid decline in apparel employment, there is little evidence of NAFTA’s having had major effects on either net employment or gross job flows in these industries.

JEL classification codes: F4, J6

Keywords: gross job flows, openness, international trade, NAFTA, real exchange rates

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