January 1990
Federal Reserve Bank of Dallas

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U. S. Trade Protection: Effects on the Industrial and Regional Composition of Employment
Linda C. Hunter

Proponents of trade protection argue that trade restraints bolster overall employment. In an economy near full employment, such as that in the United States, trade protection will have little or no effect on the level of employment in the long run. Trade protection has a significant impact, however, on the composition of employment. Hunter measures the effects of trade restraints on the distribution of employment across industries and regions of the United States. She examines three cases of U.S. trade protection: textiles and apparel, steel, and automobiles.

Hunter finds that these trade restraints benefit only a few industries while harming many others. The gains in employment accrue to the protected sector and its primary suppliers, and the losses are spread across all other industries. The regional distribution of the gains and losses from trade protection has a similar pattern. Few states gain employment, but many states are located in the East, while the losing states are concentrated in the West and Midwest.

Mexican Maquiladora Growth: Does It Cost U.S. Jobs?
William C. Gruben

The Mexican maquiladora sector constitutes a large and growing group of foreign-owned plants that manufacture products primarily for export to the United States. The emergence of maquiladoras coincided with liberalized customs laws in both Mexico and the United States.

The rise of the Mexican maquiladora, or in-bond plant, sector has been as controversial as it has been phenomenal. U.S. labor groups complain that the maquiladoras take jobs from their members. Proponents of the maquiladoras argue that those jobs would go to other low-wage countries if they did not go to Mexico. Gruben shows that the maquiladora sector's rise was part of a process of globalization of manufacturing activity that began in Asia in the 1960s. He also presents the results of indirect statistical tests of the anti-maquiladora and pro-maquiladora groups' principal arguments. The tests suggest that variables representing each of the two arguments have about equal explanatory power. This suggests that both arguments are about equally correct.