Labor Market and Political Effects of Structural Economic Changes

Abstract

This dissertation consists of three chapters in labor economics. A theme throughout these chapters is using empirical analysis to examine how local labor markets, firms, and workers respond to policy and structural economic changes in the US. Chapter 1 documents the persistent effect of deindustrialization on local economies and their residents, from the decline of the New England textile industry in the 1920s. By comparing workers in towns with more and less initial exposure to the textile industry, I document that workers in textile-heavy towns were less likely to out-migrate. The fixed cost of moving and increased family support may have played a role in the decreased migration. Workers switched to the agricultural sector and faced lower earnings on average. Young workers increased their educational attainment, but the increased schooling did not translate to better labor market outcomes nor increased migration likelihood. In Chapter 2, Ilyana Kuziemko, Ebonya Washington, Gavin Wright, and I explore the local employment and political effect of NAFTA. We show NAFTA hurt employment in areas exposed to Mexican import competition. While NAFTA-exposed counties were more Democratic during the 1980s up to the early 1990s, they became increasingly Republican after thepolicy. In the areas most exposed to NAFTA, workers significantly opposed NAFTA, and a significant number of voters with protectionist views moved toward the Republican party between 1992 and 1994. In Chapter 3, Leah Boustan, David Clingingsmith, and I investigate the effect of computer numerical control (CNC) on employment and labor productivity in the US, which are thought to have replaced semi-skilled manufacturing workers in metal manufacturing starting the 1970s. We build a novel measure of exposure to this automation shock, and we findthat industries more exposed to CNC experienced higher labor productivity, while reducing production employment. The relative demand for college-educated workers and abstract tasks rose. Workers in more exposed labor markets adjusted by shifting from metal manufacturing to other manufacturing industries. Some workers in exposed industries returned to school. Union members were shielded from job loss.