International Trade Effects And The Decline In The Union Sector
Authors: Adamson Dwight W. 
Published: February 2016

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Since the 1960s, U.S. manufacturing has undergone tremendous changes due to international trade and technological convergence.<span style="mso-spacerun: yes;">&nbsp; </span>Not all industry sectors have fared equally.<span style="mso-spacerun: yes;">&nbsp; </span>High-tech sectors (e.g., aircraft and computers) have maintained a high degree of international competitiveness as evidenced by an increasing export share.<span style="mso-spacerun: yes;">&nbsp; </span>Common technology sectors (e.g., autos and steel), conversely, have not as they have experienced a declining export share and increasing import competition.<span style="mso-spacerun: yes;">&nbsp; </span>High-tech industries typically employ highly skilled, human capital intensive workers while common technology industries are characterized by unskilled labor with lower levels of human capital.<span style="mso-spacerun: yes;">&nbsp; </span>International trade theory suggests that the more skilled high-tech labor force should receive relatively higher wages than the relatively less skilled common-tech sector under international competition.<span style="mso-spacerun: yes;">&nbsp; </span>Secondly, the level of unionization in a given industry may or may not have adverse impacts on international competitiveness.<span style="mso-spacerun: yes;">&nbsp; </span>Also, unions tend to oppose adoption of new technologies, drive highly educated workers into the nonunion sector, and may adopt end game strategies to maximize current wages at the expense of future economic viability.<span style="mso-spacerun: yes;">&nbsp; </span>Consequently, international trade and high-tech industries may have a negative effect on union participation rates.</span></span></p><p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">&nbsp;</span></span></p><p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">The issues addressed include the effect of international trade and technological comparative advantage on union and nonunion wage levels, and the indirect effect of trade and technology on union participation.<span style="mso-spacerun: yes;">&nbsp; </span>This study uses the National Longitudinal Survey (NLS) panel data set.<span style="mso-spacerun: yes;">&nbsp; </span>The empirical results suggest that international trade effects wage levels, and high-tech industries appear to have a higher wage distribution after controlling for labor market, product market, and individual characteristics.<span style="mso-spacerun: yes;">&nbsp; </span>Furthermore, trade and technology appear to be negatively related to the degree of union density.<span style="mso-spacerun: yes;">&nbsp; </span>The secondary effect tends to lower union and nonunion wages, primarily for less-skilled workers.<span style="mso-spacerun: yes;">&nbsp; </span>It also may partially explain the trend of increasing income inequality for less-skilled workers and the opposition of unions to free-trade policies.(<span style="mso-bidi-font-style: italic;">JEL</span> J3, J5)</span></span></p>