Abstract
An elasticity of textile employment with respect to textile imports is estimated for the nation, two regions, and four local areas. A theoretical labor demand equation is derived which endogenizes textile imports and facilitates direct estimation of import-employment elasticities. The results indicate the textile imports only partially substitute for domestic employment and that the estimated elasticity varies by region. The estimated elasticity was -.27 for the nation and ranged from -.22 to -.31 at the regional level and from -.43 to -.19 for the local analysis. The elasticities are used in an impact analysis to demonstrate the over and under estimation of direct employment loss which occurs when estimates from spatial averages are used.
Highlights
During the 1980's the United States began to experience increasing trade deficits, which are still acute in the textile sector
The estimated regional textile import-employment elasticities ranged from -.22 in the Piedmont region to -.31 in the rest of the country with a national average elasticity of
The estimated local textile import-employment elasticity ranged from -.43 to -.19 within the Piedmont region
Summary
During the 1980's the United States began to experience increasing trade deficits, which are still acute in the textile sector. Over the six year period, U.S textile employment declined by 142,113 jobs as compared with a decline of 132,230 in the preceding decade of the 1970's [Department of Commerce (1969-1986a)]. Changes in the balance of trade effected domestic textile employment as domestic producers adjusted output to meet the new market conditions. The adoption of new technologies has allowed the substitution of capital for labor in the sector. The substitution of capital for labor only partially explains the recent large textile employment decline because the value of domestic output decreased by 15% during early 1980's as compared to the 1970's [Department of Commerce (1969-1986b)]
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