EXPORT‐LINKED EMPLOYMENT IN SOUTHERN CALIFORNIA

I. INTRODUCTION Due to the tremendous growth in the volume of international trade in recent years, there is growing interest in the relationship between trade (exports, in particular), and domestic employment. However, relatively little is known about the relationship between international trade and employment. This is particularly true on a regional basis. The reason for the dearth of knowledge is that the standard industrial classification (SIC) used to define industries for purposes of government data collection does not distinguish between industries (or firms in industries) that produce for local markets and those that produce for export markets. As a result, researchers cannot determine the effect of international trade flows on employment at the regional level. Two decades ago, the lack of information on trade-employment links was not critical, since such a small proportion of the economy was oriented toward international trade. However, the greater importance of international trade now increases the need for an understanding of the effects of international trade at the local level. The purpose of this paper is to try to shed some light on this subject by making the best possible use of the limited amount of existing data. The relevant data sources are outlined below, and a methodology based on available data is developed to estimate the level of state or regional employment that is linked to exports. We focus on exports because the greatest employment impacts are found here. This does not imply that imports do not support local employment. In fact, imports do generate jobs in certain categories - for example, in transportation and wholesale trade. However, the data sources on import-linked employment are not sufficient to make a measurement of these import-related impacts. The text below describes a methodology that can be used to estimate a database on export-related employment for a state or region, and provides an example of how this methodology can be applied using data from the Greater Los Angeles (Five-County) region. Tables with estimates of total regional export-linked employment (by industry) and the regional employment associated with exports to each of the region's top 10 exports trading partners are included. These tables provide an indication of the historical importance of Asian trading partners. based on these data, a discussion of the potential regional economic implications of the current crisis in Asia is included. Policy implications of the data are discussed, as well as the potential future uses of the data by policymakers. II. DATA SOURCES FOR ESTIMATING EXPORT-RELATED EMPLOYMENT For a number of years, the Census Bureau of the U.S. Department of Commerce published a report entitled Exports from Manufacturing Establishments. This publication reported estimates of employment linked to manufactured exports at the state level (with a three-year lag.) Unfortunately, the Commerce Department discontinued this publication in 1994, leaving those interested in international trade with no data source relating trade to employment. Currently, export data by state are available from several sources. There are two main sources of data on state merchandise export statistics, the Exporter Location (EL) series and Origin of Movement (OM) series. Both series are issued by the U.S. Bureau of the Census and are made available by the Massachusetts Institute of Social and Economic Research (MISER) of the University of Massachusetts at Amherst. The Exporter Location (EL) series measures exports at the zip-code level and thus can report exports of a metropolitan area. However, these data must be used with caution since the EL series assigns export activity to a location by looking at the location of the "exporter of record." The exporter of record is defined as the "entity principally responsible for effecting export from the United States." In many cases, this does not correspond to the original producer of the good, but rather an intermediary or export-marketing organization. …