CIAO DATE: 08/03

Survival of the Best Fit: Exposure to Low-Wage Countries and the (Uneven) Growth of US Manufacturing Plants

Abstract

Using a new measure of industry exposure to international trade that focuses on where imports originate rather than their overall level, the authors show that plants are less likely to survive--and industry output and employment are less likely to grow--when the share of the industry's imports from the lowest-wage countries is high. In addition, plants are more likely to switch industries in response to trade with low-wage countries. Those that do switch move to industries that are more capital- and skill-intensive.

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