Good Jobs, Bad Jobs: What’s Trade Got To Do With It?

Exploiting data on US local labor markets between 1990 and 2010, we analyze the heterogeneous impact of rising import penetration on employment growth of ‘good’and ‘bad’jobs. Three salient findings emerge. First, job polarization —defined as an increase in good and bad jobs and a decrease in middle quality jobs —occurred over this time period in US local labor markets, but is not due to local trade exposure. Instead, local exposure to routine-biased technological change (RBTC) is found to be the primary catalyst. Second, rising local exposure to import penetration reduces employment growth across the entire job quality distribution. However, the advserve effects of import penetration are more pronounced for both good and bad jobs. Thus, trade exposure is found to have an anti-polarization effect. Finally, local employment growth across the job quality distribution is driven by local exposure, rather than occupation-specific exposure, to RBTC and import competition. JEL: F13, J21, J31