Document Type
Article
Publication Date
5-7-2013
Subject
F30 - International Finance: General, F31 - Foreign Exchange, F10 - Trade: General, J20 - Demand and Supply of Labor: General
Abstract
We estimate the effects of real exchange rate movements on employment in US cities between 2003 and 2010. We explore the differences in the composition of local industries to construct city-specific changes in exchange rates and estimate their effects on local employment in manufacturing industries and in nonmanufacturing industries. Controlling for year and city fixed effects, we find that a depreciation of the US dollar increased local employment in the manufacturing industries, our proxy for the tradable sector. The depreciation also increased employment in the nonmanufacturing industries, the nontradable sector. Furthermore, the effects on nonmanufacturing employment were stronger in cities that had a higher fraction of manufacturing employment, indicating the exchange rate movements’ indirect effects through the manufacturing industries. We also consider an alternative definition of the tradable sector that is broadened to include five service industries. The findings are similar.
Recommended Citation
Tang, Yao and Huang, Haifang, "How Did Exchange Rates Affect Employment in US Cities?" (2013). Economics Department Working Paper Series. 7.
https://digitalcommons.bowdoin.edu/econpapers/7