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J Labor Res. 1997 Fall;18(4):613-9.

Unemployment, immigration, and NAFTA: a panel study of ten major U.S. industries.



The potential employment effects of the North American Free Trade Agreement (NAFTA) was the central concern of debate before the treaty was eventually passed. Panel data on unemployment rates in 10 major industries in the US during 1983-1994 were analyzed to assess the sensitivity of unemployment rates with respect to industry characteristics, macroeconomic variables, and Canadian and Mexican immigration to the US in the aftermath of the advent of NAFTA. The industries studied are mining; construction, durable goods, nondurable goods, transportation and public utilities; wholesale and retail trade; finance, insurance, and real estate; services; agriculture; and government. Analysis of the data determined that the output produced by the industry, unemployment insurance coverage, and interest rates are significant determinants of industry unemployment rates, but union presence does not affect industry unemployment. Both Canadian and Mexican immigrants seem to complement the US labor force, with Canadian immigrants being highly complementary to US labor. The Chow test found no evidence that NAFTA has changed the structure of unemployment determination in the industries studied.

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