Expected Wage Losses Due to Trade-Related Job Displacements

We use econometric estimation and an industry-specific economic simulation model, combined with data from U.S. manufacturing industries and individual U.S. workers, to estimate the expected wage losses of workers displaced due to tariff reductions. We find small but significant wage losses conditional on job displacement for 15 types of workers across seven manufacturing industries. The modeling framework that we introduce provides a practical tool for prospective analysis of the labor market effects of changes in tariffs that does not require data that specifically identify trade-related displacements. It also does not require significant historical variation in tariff rates or measures of confounding factors to serve as controls.