Abstract: This paper documents the persistence of local shocks in the absence of social insurance from a key episode of deindustrialization in the US: the decline of the New England textile industry in the 1920s. Using a continuous difference-in-differences strategy, I show that exposure to the industrial decline did not significantly affect the town-level population, and individuals in textile-heavy towns did not migrate out of affected areas. Instead of out-migrating, young residents responded with increased educational attainment. Using a matched difference-indifferences design that exploits variation in timing and location of textile plant closures and variation within towns based on "critical" age of education, I find that young individuals in plant closure towns increased their eighth-grade completion but their labor market outcomes did not improve by 1940. Older workers switched to the agricultural sector and faced decreased occupational earnings. The localized effect of the shock suggests revisiting the debate on place- versus person-based policies, and highlights the importance of targeted education and training suited for the local economic needs and the role of a diverse local industrial base in local labor market resilience.

Local Economic and Political Effects of Trade Deals: Evidence from NAFTA

with Ilyana Kuziemko, Ebonya Washington, and Gavin Wright [NBER working paper 29525]

(Forthcoming at American Economic Review)

Abstract: Why have white, less educated voters left the Democratic Party over the past few decades? Scholars have proposed racial resentment, social issues, and deindustrialization as potential answers. We highlight the role played by the 1994 North American Free Trade Agreement (NAFTA). In event-study analysis, we demonstrate that counties whose 1990 employment depended on industries vulnerable to NAFTA suffered large and persistent employment losses relative to other counties. These losses begin in the mid-1990s and are only modestly offset by transfer programs. While exposed counties historically voted Democratic, in the mid-1990s they turn away from the party of the president (Bill Clinton) who ushered in the agreement and by the 2000s are among the most Republican. Employing a variety of micro-data sources, including 1992-1994 respondent-level panel data, we show that protectionist views predict movement toward the GOP in the years that NAFTA is debated and implemented. This shift among protectionist respondents is larger for whites (especially men and those without a college degree) and those with conservative social views, suggesting an interactive effect whereby racial identity and social-issue positions mediate reactions to economic policies.

Abstract: Since the 1970s, computerized machine tools have been replacing semi-skilled manufacturing workers, contributing to factory automation. We build a novel measure of exposure to computer numerical control (CNC) based on initial variation in tool types across industries and differential shifts toward CNC technology by tool type over time. Industries more exposed to CNC increased capital investment and experienced higher labor productivity. Total employment rose, with gains for college-educated workers and abstract tasks compensating for losses of less-educated workers and routine tasks. Employment gains were strongest for unionized jobs. Workers in exposed industries returned to school and relevant degree programs expanded. 

The Economic Consequences of Trade Protection: Evidence from the Smoot-Hawley Tariff Act of 1930

with Ahna Pearson

Abstract: This paper examines the effect of tariff increases on regional economies after the passage of the Smoot-Hawley Tariff Act of 1930, which raised tariff rates on approximately one-third of all dutiable items. We construct a Bartik-style measure of the Average Tariff Changes (ATC) for each local labor market, a measure of how exposed the labor market is to the tariff policy. By employing a continuous difference-in-differences strategy, we find local labor markets with a larger exposure to the tariff policy experienced a significant increase in the labor force participation rate. While the Smooth-Hawley Tariff Act was originally proposed to help the struggling agricultural sector, the rise in labor force participation was concentrated among the urban labor markets, particularly among the urban, school-going age workers (age 16-24). This may imply that workers decided to work instead of continuing education, decreasing investment in the human capital of the local population, which has ambiguous implications for the long-run regional economic development. There is no significant effect on rural, agricultural-heavy local labor markets. The tariff policy had no significant effect on the value of agricultural lands or the use of agricultural machinery in rural labor markets.