Globalization and American Job Loss: Public Policy to Help Workers

Abstract

The impact of free trade—indeed, globalization in general—is a hot topic of public debate. Most economists highlight the net benefits of free trade to national economies: gains to consumers from lower prices, gains to the overall economy from greater efficiency, and gains to citizens from an improvement in total welfare. Yet economists also agree that trade liberalization reduces the income of some producers and workers. In other words, the distribution of the benefits from free trade, across industries, occupations, regions, and ultimately individuals, is uneven. American jobs have been lost in industries such as automobiles, steel, textiles, footwear, and consumer electronics as goods produced abroad have increasingly come into competition with domestically produced items. Growth of foreign markets through exports, meanwhile, has benefited other industries, including aircraft, computers, entertainment, and finance.