Job Creation, Job Destruction, and International Competition

Klein, Schuh, and Triest explore how fluctuations in exchange rates, overseas economic activity, and the relaxation of trade restrictions (such as NAFTA) contribute to the simultaneous creation and destruction of jobs within the American economy. They find these "gross job flows" vary greatly across industries and even among firms within industries. Klein, Schuh, and Triest conclude that although the openness to international trade and other international factors expose some workers to significantly greater risk than is often acknowledged by economists and trade policy analysts, globalization improves our overall economic performance and efficiency. The authors advocate policies that target workers dislocated by trade, rather than policies, such as tariffs, that endeavor to protect workers by protecting industries.