On Krein on Autor, et al.

(Don Boudreaux)

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Here’s yet another letter to my daily correspondent Nolan McKinney (a “proud Trump man”):

Mr. McKinney:

You allege that – in my defense yesterday of my Mercatus Center colleague Veronique de Rugy against the charges leveled by Julius Krein – I “ignore Krein’s powerful use of David Autor’s finding that Chinese imports lowered the overall number of American jobs.”

As I said in my letter of yesterday, the fallacies packed into Krein’s essay are too numerous even to list, much less to address. But given that you’ve raised the Autor issue as bait, I’ll bite.

For a number of related reasons, I believe Autor, et al.’s, findings to be unreliable.

First, as Scott Sumner argues, one empirical finding, or even a handful, are insufficient to overturn a well-established proposition – and the proposition that there is no reason to believe that international trade has any effect on the net number of jobs overall in an economy is in economic theory very well established.

Second, there have been recent empirical studies that reach conclusions contrary to those reached by Autor and his co-authors. See for example this paper by Jonathan Rothwell and this one by Ildikó Magyari. These papers were left unmentioned by Mr. Krein.

Third, Autor, et al., claim to find that expanded U.S. trade with China destroyed on net 2.4 million American jobs from 1999 to 2011 – which is an average of 15,385 jobs destroyed during each of those 156 months. But also during each of those months the average number of jobs destroyed by all causes was about 1.75 million, while the average number of (non-farm) jobs created by all causes was 1.783 million (Job churn – job destruction and job creation – in an economy as dynamic and as large as that of the U.S. is massive.) The total number of non-farm jobs in the U.S. rose from 127,725,000 in January 1999 to 132,924,000 in December 2011. If Autor, et al., are correct, had the U.S. not increased trade with China the December 2011 number would instead have been 135,324,000. Especially – but not only – because the years covered by the Autor, et al., econometric study include those of the Great Recession, I do not believe that even the most careful and advanced such study can reliably determine that, had we Americans been ‘protected’ from one particular source of job churn – trade with China – the total number of jobs in 2011 would have been 1.8 percent higher than it actually was.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

P.S. See also these comments of mine on Autor, et al., from 2016.