Cost of job loss from imports

October 23 2001 - Economist Lori Kletzer has researched the fates of workers who have lost jobs as a result of trade competition.

Kletzer, an associate professor of economics at the University of California, Santa Cruz, found that two-thirds of trade-displaced workers earned less when they found a new job than they did on their old job. Also, a quarter of such works experience earnings losses in excess of 30%.

Lori Kletzer's new book Job Loss from Imports: Measuring the Costs (Washington, D.C.: Institute for International Economics, 2001) looks at the consequences for American workers of changes in the US economy during an era of increasingly free trade.

"We know that in a dynamic economy, jobs are created and lost, and workers are displaced," Lori Kletzer said. "I wanted to look more deeply at the types of work trade-displaced workers are moving into and how those jobs compare to what they used to do. We need that information to design effective policies."

Based on data from the Displaced Worker Surveys, Kletzer gives answers to several key questions about the cost of trade-related job loss:

- How do these workers compare to those displaced from other manufacturing industries?

- How sizable are the earnings losses?

- What can we learn from the pattern of reemployment and earnings that will aid in the re)design of adjustment services?

The costs of import-competing job loss can be high for some employees, but not starkly higher than the costs of other types of manufacturing job loss, according to Kletzer.

Her analysis also shows that a narrow - but significant - group of workers suffer a considerable earnings drop because of import-competing job loss, whereas for other eployees, the costs are smaller.

"Understanding this range of outcomes should assist policymakers in targeting assistance to address the real costs of import-competing job loss," said Kletzer.