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Fringe Benefits and Import Competition

Tempesti, Tommaso (2015): Fringe Benefits and Import Competition.

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In the United States fringe benefits are now more than 30% of compensation. While many studies have focused on the impact of trade with developing countries on U.S. wages, not much attention has been given to the impact of such trade on other components of compensation. But if trade affects the share of benefits in compensation, the studies which focus on wages and ignore fringe benefits likely give us biased estimates of the effect of trade on workers’ total compensation and consumption. I use data about individual workers’ fringe benefits from the NLSY79. I focus on workers who worked in manufacturing in 1991 and I follow them up to 2006. I then combine this individual level dataset with a measure of exposure to Chinese imports at the industry level and with an instrument for it, as in Autor et al. (2014). I estimate the effect of Chinese import competition on fringe benefits to be positive and economically and statistically significant. The results are robust to the inclusion of several individual and industry level control variables. Differently from previous studies, my results suggest a more optimistic view of the effect of trade with China on U.S. workers’ overall compensation.

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