Establishment economists will defend to the death the idea that trade does not destroy jobs. Yes, I’m serious. They believe that. Really. Instead, they say, job losers move into other jobs so there is no net job loss.He goes onto to bash TPP which is not more about protecting patents and less about free trade. But his new research is a great paper by David Autor, David Dorn, and Gordon Hanson:
Adjustment in local labor markets [after trade liberalization] is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed worker experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize.Autor, Dorn, and Hanson are confirming what anyone familiar with the Stopler-Samuelson theorem would have predicted. Even if these workers found another job – their real wages would fall by more than the price of goods at Wal-Mart. I have no clue who establishment economics may be but those of us who studied international economics were not surprised by these research results. Incidentally this version has a picture that includes Paul Krugman as if he does not understand the Stopler-Samuelson proposition. C’mon man!