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The Impact of International Trade on Real Wages in U.S. Manufacturing, 1985-1989

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  • Hans-Jurgen Engelbrecht

Abstract

This study investigates the impact of international trade on real wages earned in U.S. manufacturing during the period 1985-89. Many of the previous studies which try to explain the structure of U.S. industry wages include only the negative impact of increased import penetration, or they exclude international trade variables altogether. In order to obtain a more balanced assessment of trade effects, wage equations including, in turn, an import-, export-, and net trade variable are estimated using a generalised least squares procedure. A parsimonious modelling approach is adopted which focuses on a few catch-all variables instead of the large number of variables used in many micro wage studies. It is found that trade had a positive impact on the average real wage, despite the massive trade deficits during the period. Further analysis suggests that it increased both the competitive wage and the amount of economic rent earned by workers, with the impact on the former being stronger than the impact on the latter. However, other variables, in particular capital intensity, had even stronger positive impacts. [F14]

Suggested Citation

  • Hans-Jurgen Engelbrecht, 1997. "The Impact of International Trade on Real Wages in U.S. Manufacturing, 1985-1989," International Economic Journal, Taylor & Francis Journals, vol. 11(1), pages 69-86.
    • Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:69-86
    DOI: 10.1080/10168739700000005
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