اثرات افزایش ارزش دلار در بخش تنظیم بازار کار: نظریه و شواهد

We examine the extent to which exchange rate fluctuations affect sectoral employment and wages in the United States. We introduce a theoretical rational expectation model that decomposes movements in the exchange rate into anticipated and unanticipated components. The model demonstrates the effects of demand and supply channels on the response of the nominal wage and labor employment to changes in the exchange rate. The evidence indicates that the deflationary effect dominates on industrial nominal wage in manufacturing and transportation industries in the face of dollar appreciation. More importantly, there is evidence of a decrease in employment growth in several industries in response to dollar appreciation, which is statistically significant in construction and at the aggregate level. This evidence is consistent with a decrease in labor demand given the loss of competitiveness of U.S. products following dollar appreciation. There are negative effects of dollar appreciation on labor market conditions in the United States. Nonetheless, dollar appreciation is consistent with an increase in employment growth in the mining sector where the share of imports is the largest among U.S. industries.

Since the agreement to establish flexible exchange rates in the early 1970s, exchange rates of industrial countries, including the United States, have been highly fluctuating. Observed volatility in the exchange rate of the dollar has stimulated a debate in academia and policy arena over what the government response should be. Specifically, it was advocated that the dollar’s appreciation may be responsible for the recession and increase in unemployment during the 1980s. The dollar appreciation decreases the price of foreign goods relative to home goods, decreasing the demand for home goods. In the labor market, the reduction in labor demand is likely to increase unemployment and moderate nominal wage inflation. Nonetheless, the dollar’s appreciation, by pushing down the dollar’s prices of intermediate imported goods, may increase the marginal product of labor and, hence, labor demand. This channel is likely to moderate the adverse effects of the dollar appreciation on employment and the nominal wage. Concerns about the adverse effects on labor markets in the U.S. grew in the wake of the real appreciation of the dollar which appears to have been robust during the 1980s. To illustrate, Graph 1 depicts fluctuations in the nominal and real effective exchange rate of the U.S. dollar between 1970 and 2000. The most striking aspect of fluctuations is the spike centered at 1985. The exchange rate of the dollar appreciated sharply. This appreciation was followed by a severe depreciation after the so-called Plaza Agreement in September 1985.1Nonetheless, the apparent robustness of the dollar appreciation during the 1980s prompted calls that the government should intervene systematically in foreign exchange markets to stabilize the dollar and protect employment and output against the adverse effects created by exchange rate fluctuations. At a disaggregate level, a number of recent studies have attempted to measure the effects of exchange rate fluctuations on economic conditions in industries of the United States. Specifically, empirical studies have considered the claim that sharp appreciation of the dollar after 1985 is responsible for the decline in tradable sectors like manufacturing, agriculture, and forestry products and the relative growth in non-tradable sectors such as services, construction, transportation, and public utilities. Along this line, Maskus (1990) examines the effects of exchange rate risk across major sectors of international trade. His results demonstrate that the exchange rate risk has a negative impact on trade. He also found that the agriculture sector is more sensitive to the exchange rate risk compared to the manufacturing sector. Glick and Hutchison (1990) discuss that previous studies on the effect of the dollar appreciation on manufacturing fail to distinguish between exchange rate changes that are exogenous and changes that are endogenously determined by policy changes and other shocks. For example, a policy-induced exchange rate appreciation arising from a fiscal expansion or monetary contraction has unclear effects on aggregate and sectoral movement. Accordingly, the nature of the disturbance moving the exchange rate in any particular period is essential in analyzing effects on the sectoral allocation of resources. Glick and Hutchison report evidence that the contractionary effect of the dollar appreciation on sectoral output is unstable and sample specific. Revenga (1992) investigates the impact of increased import competition on employment and wages, using data for a panel of U.S. manufacturing industries over the 1977–1987 period. This period captures the dollar’s appreciation during the early 1980s and its subsequent depreciation. Changes in import prices have had large and significant effects on both employment and wages. Nonetheless, the impact of an adverse trade shock on average wages in a particular industry is quite small where most of the adjustment occurs through employment. Campa and Goldberg (1997) discuss that changes in the exchange rate can significantly influence the profitability and performance of U.S. manufacturing industries.2 To measure the sensitivity of domestic manufacturing industries to the dollar fluctuation, one must first examine the channels that transmit such shocks to production activity and, ultimately, to the economy as a whole. Capturing U.S. industrial reliance on international markets involves measuring the extent to which manufacturers sell products to foreign markets, use foreign-made inputs, and more directly compete with foreign manufacturers in domestic markets. The most widely used indicator typically calculated openness to trade by dividing (import+export) revenues of final products to domestic production revenues. This indicator fails to consider the growing use of foreign inputs in the manufacture of domestic goods. Campa and Goldberg (1997) use several measures to capture different industry’s sensitivity to international shocks. The first measure is export shares. Producers with high export shares are likely to be more sensitive to international shocks than producers with a lower export share. They calculate the export share as the ratio of industry export revenues to industry shipments. This measure captures the portion of a producer’s revenues that is generated in foreign markets. Second, import shares, or the ratio of imports to consumption of the industry’s output captures foreign penetration in a particular industry. The industry’s output and employment are also likely to be more sensitive to international shocks when there is a high degree of foreign penetration in domestic markets. Imported input share or imported inputs as a share of the value of production is the third measure for the degree of openness.3 In contrast to the other two measures which provide guidance on the vulnerability of producer revenue to dollar fluctuation and other international forces, the imported input share measure provides a window into the potential sensitivity of a producer to shocks experienced through the cost side of its balance sheets. Finally, they present a measure of net external orientation defined as the difference between industry export share and import share. Campa and Goldberg conclude that industries in the United States show the most volatile patterns in net external orientation. After remaining, on average, primarily export oriented in the 1970s, U.S. industries experienced an increased international exposure in the early to mid 1980s through their reliance on imported inputs in production. In the late 1980s and in the 1990s, export shares grew faster than imported shares, raising the positive net external orientation of U.S. industries. U.S. manufacturing industries have also steadily increased their use of imported inputs in production, on average from 4% in 1975 to more than 8% in 1995 (Table 1).4 The increase in the imported input use across manufacturing was the greatest in the first half of the 1980s, when the U.S. dollar dramatically appreciated and reduced the cost of foreign produced inputs relative to inputs produced domestically. By 1985, imported inputs as a share of total costs in the U.S. manufacturing industries had risen to about 6%. Even after the dollar depreciated in the second half of the 1980s, the presence of imported inputs continued to increase in the United States. Overall, the imported input share has more than doubled in many manufacturing industries over the past two decades, creating concerns regarding the adverse effects of dollar appreciation on employment and production in the manufacturing sector of the U.S. economy. Given demand and supply channels, what are the effects of the dollar appreciation on employment and the nominal wage? We examine the extent to which exchange rate fluctuations affect the U.S. sectoral employment and wage.5Section 2 introduces a theoretical model that decomposes movements in the exchange rate into anticipated and unanticipated compenents using rational expectations. The solution of the model demonstrates the effects of demand and supply channels on labor employment and the nominal wage responses to changes in the exchange rate. Based on these solutions, we formulate, in Section 3, an empirical model for sectoral nominal wage and employment. The model incorporates demand and supply shifts as well as exchange rate shifts. The data under investigation are for average earnings and total hours of all persons by industry according to the Standard Industrial Classification (SIC) in the National Income and Product Accounts of the United States. Section 4 presents the empirical results. The estimation highlights the relative importance of exchange rate fluctuations in determining sectoral labor employment and the nominal wage. Section 5 concludes. Overall, the evidence indicates that the deflationary effect dominates on industrial nominal wage in manufacturing and transportation industries in the face of dollar appreciation. More importantly, there is evidence of a decrease in employment growth in several industries in response to dollar appreciation, which is statistically significant in construction and at the aggregate level. This evidence is consistent with a decrease in labor demand given the negative effect of dollar appreciation on foreign demand for U.S. products, raising concerns about the negative effects of dollar appreciation on labor market conditions in the United States. Nonetheless, dollar appreciation is consistent with an increase in employment growth in the mining industry, where the share of imports is the largest among U.S. industries.

This investigation has focused on the effect of foreign trade in determining economic conditions in the labor markets of industries in the United States. Towards this investigation, we build a theoretical model that incorporates the effects of exchange rate fluctuations on the demand and supply sides of the economy. We identify three directions for the effects of an unanticipated appreciation of the dollar on the economy. The first channel is on the demand-side through the effects of appreciation in increasing imports and decreasing exports. The result is a contraction of aggregate demand. The second channel is through the effect of appreciation in decreasing the demand for the dollar as agents expect the exchange rate to return to its anticipated steady-state value. The result is an expansion of aggregate demand. On the supply side, appreciation allows producers to buy cheaper intermediate goods. The result is an expansion of the output supplied. The combined effects of the three channels remain indeterminate on variables in the labor market, employment and the nominal wage. We attempt to investigate these effects using sectoral employment and wage data for the United States. The evidence indicates that the deflationary effect of dollar appreciation is more dominant on the nominal wage in manufacturing and transportation industries. More importantly, dollar appreciation decreases the international and domestic demand for U.S. products. The resulting reduction in labor demand is evident by a reduction in employment growth in the majority of industries, which is statistically significant in construction and at the aggregate level. In contrast, the largest share of imports in the mining industry is consistent with a significant increase in employment growth in the face of dollar appreciation. We conclude: despite the small degree of openness of industries in the United States, the results of dollar appreciation decrease employment growth and moderate nominal wage inflation. Accordingly, concerns about the adverse effects of dollar appreciation on labor market conditions are generally supported by the disaggregate and aggregate evidence of employment growth in several industries of the United States.