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HOW DID EXCHANGE RATES AFFECT EMPLOYMENT IN U.S. CITIES?
Author(s) -
Huang Haifang,
Tang Yao
Publication year - 2016
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12159
Subject(s) - depreciation (economics) , spillover effect , exchange rate , economics , manufacturing sector , affect (linguistics) , labour economics , manufacturing , demographic economics , monetary economics , business , macroeconomics , human capital , economic growth , linguistics , philosophy , marketing , financial capital , capital formation
We estimate the effects of exchange rate on U.S. employment, exploiting differences in industrial composition across major cities. We find that a 1% depreciation of export‐weighted real exchange rate has a positive 0.98% direct effect on manufacturing employment. Its indirect effect on local nonmanufacturing employment rises with the size of the local manufacturing sector, consistent with the hypothesis that there exists a local spillover from the tradable to the nontradable sector. In cities with heavy concentration of manufacturing employment, the indirect effect is statistically significant and about 60% as large as the direct effect measured by the number of jobs. ( JEL F3, F1, J2)