State-Level Import Penetration

I develop a structural econometric model of import penetration in different parts of the United States and then estimate the parameters of the model using data for the furniture industry, as well as several other U.S. manufacturing industries. The model is designed to address the limited availability of sub-national data. After estimating state-level import values and penetration rates, I simulate the effects of changes in tariff rates on consumer prices and domestic employment in different states. The model suggests that estimates of the local labor effects of imports can be improved by incorporating data on the location of import entry.