The roles of international trade and immigration on U.S. local labor and housing market differentiation

Zhang, Cong

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https://hdl.handle.net/2142/92768 Copy

Description

Title

The roles of international trade and immigration on U.S. local labor and housing market differentiation

Author(s)

Zhang, Cong

Issue Date

2016-07-08

Director of Research (if dissertation) or Advisor (if thesis)

Albouy, David

Doctoral Committee Chair(s)

Albouy, David

Committee Member(s)

• McMillen, Daniel
• Borgschulte, Mark
• Forsythe, Eliza

Department of Study

Economics

Discipline

Economics

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• International Trade
• Immigration
• Housing Market
• Labor Market

Abstract

"This thesis identifies the effects of international trade and immigration on local labor and housing markets. Housing not only relates to individual welfare, but also affects the performances of local industries, such as construction, real estate, and mortgage financial service industries. Therefore, understanding the effects of international trade and immigration on housing is essential for governments to guide local development, for housing related industries to serve local economy, and for individuals to plan housing mortgage. Chapter 1, ""The Effects of Imports on Local Labor Market: A Decomposition"", uses OECD STAN Bilateral Trade Database by Industry and End-use category to study the effects of import on U.S. local labor market outcomes. The results are comparable to Autor, Dorn, and Hanson (2013), and confirm that total import reduces local wages and employment rates more in more exposed areas. Since OECD also separates import volumes by their end-use categories, I could separately examine the effects of intermediate goods import and final goods import on local labor market. The decomposition exercise indicates intermediate import is the driving force of the negative effects of total import on non-manufacturing industries. Chapter 2, ""The Dynamic Effect of Imports on U.S. Local Jobs and Housing"", highlights the link between import shocks and local housing price differentiation. In this chapter, I perform theoretical and empirical analyses to examine the dynamic effects of intermediate goods import on labor and housing markets across U.S. locations. I separate local industries into tradable and non-tradable sectors and build a two-sector spatial equilibrium model, where local housing and labor markets interact. Consistent with the model, I find that intermediate import reduces rents, housing prices, the employments and wages of both tradable and non-tradable sectors. The mechanism identified is that intermediate import first reduces the local labor demands of the two industry sectors which lead to a local wage decline. The decrease in local wage is followed by a reduction in local rent and housing price. Declining housing price and rent further reduce the local non-tradable labor demand because the non-tradable sector is tightly related with housing. Chapter 3, ""The Impacts of Immigration on Local Rent"", separates immigrants according to their races and education levels, and explore their heterogeneous effects on metropolitan rental prices. Since the majority of new immigrants rent houses, the effect of immigration on rental prices is important for making immigration policies. The empirical results show that low-educated Hispanic immigrants lower rents, whereas other immigrants tend to live in places where local rents are already high. Further investigation suggests low educated Hispanic immigrants drive natives from renting a house to purchase a house, and thus have negative effect on local rents."

Graduation Semester

2016-08

Type of Resource

text

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Copy Right 2016 Cong Zhang

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