Does the Federal Reserve ‘support’ Trump?

Justin Pierce (Federal Reserve Board) and Peter Schott (Yale School of Management) have come up with research that shows that US manufacturing employment declined after the United States conferred Permanent Normal Trade Relations status on China at the turn of the millennium. They account for other factors. The same thing did not happen in Europe. But, Europe had conferred PNTR in the 1980s itself. It would have given their conclusions a huge boost if they had data that showed that Europe too witnessed a swift decline in manufacturing employment after the conferment of PNTR on China in the  1980s. They have an updated version of their paper here.

As one visited the research page of Justin Pierce, one came across couple of other interesting titles: ‘Does Trade Liberalisation with China influence U.S. elections?’ and ‘Trade liberalisation and mortality: evidence from U.S. counties’. The abstracts are, sure, interesting. In fact, their conclusions do logically lead to the conclusion that Donald Trump has got it right.

Sample this from the paper on mortality and trade liberalisation (updated November 2016):

We investigate the impact of a large economic shock on mortality. We find
that counties more exposed to a plausibly exogenous trade liberalization exhibit
higher rates of suicide and related causes of death, particularly among whites.
These trends are consistent with our finding that more-exposed counties experi-
ence relative decreases in manufacturing employment a sector in which whites
are disproportionately employed and relative increases in the unemployment

Or, this from their paper on trade liberalisation and U.S. elections (April 2016):

This paper examines the impact of trade liberalization on U.S. Congressional
elections. We find that U.S. counties subject to greater competition from China
via a change in U.S. trade policy exhibit relative increases in turnout, the share
of votes cast for Democrats and the probability that the county is represented by
a Democrat. We find that these changes are consistent with Democrats in office
during the period examined being more likely than Republicans to support legis-
lation limiting import competition or favoring economic assistance.

I had also stumbled upon another research paper (again from the Federal Reserve Board published in 2009 (or, 2010?) on the impact of immigration on youth employment in the United States:

Aggregating these counterfactual employment rates in 2005 up to the national
level implies that the fraction of teens employed in the previous week would have been about 6.5 (males) and 7.1 (females) percentage points higher in 2005 had immigration remained at its 1990 levels. Of course, this calculation is derived from average immigration effects estimated over 5-to-10 year intervals, so it’s possible that the true contribution of immigration to declining youth employment between 1990 and 2005 may be somewhat larger or smaller.

Growth in immigration appears to have reduced youth employment-population
ratios over the past few decades. Though the slight increase in enrollment rates in
response to immigration suggests that some youth are induced to substitute their time from work to schooling, I find little support for the hypothesis that an
immigration‐induced decline in employment has large positive effects on employment 10 years later. As a whole, these findings constitute suggestive evidence that the recent decline in youth employment is not entirely driven by an increased emphasis on educational and extracurricular activities and that at least part of the decline reflects increased labor market competition from substitutable labor. More work is needed to fully account for the recent employment trends and to explore the welfare consequences of employment declines for which immigration is not directly responsible.

This paper also highlights variation in the effects of immigration by age, echoing
recent papers in the immigration literature which characterize the heterogeneity of
immigration effects throughout the native population. By focusing only on adults,
earlier research may have ignored the subset of the population that appears to be most affected by recent immigration growth. Future immigration studies may wish to take into account the effects on younger individuals as well.


8 thoughts on “Does the Federal Reserve ‘support’ Trump?

  1. Anantha — I have great respect for you and your analysis/thoughts and your wide reading that you share through your linkfests, (though I disagree with some of your positions), that’s why this is amongst the few places I come to regularly comment.

    I don’t, actually, have a strong view on Hilary (if someone like Kasich was the Repub nominee he’d be whom I would support probably) but it almost boggles the mind that an informed commentator cannot have the strongest reservations about Trump (and even the Repubs generally, after the last 8 years but that’s a different issue)..

    Since you’re so sensitive about such exchanges where views strongly opposed to you are expressed, I won’t go any further here but just leave the below link which, again, shows (for the scandal du jour for Hilary) that when it comes to the Clintons the media loves to investigate non-issues and somehow paint them as mean and calculating whereas when you look into it there is nothing major. Again, who knows she may be mean and calculating (though, as an example of media ignorance of positive reporting, this Foundation has literally saved millions of lives), but take a similar magnifying glass to Trump and you’ll have to hold your nose all the time.

    All the best.


    1. Thank you, JS. For the record, I am not being sensitive here. I responded to the inconsistency of treatment of one’s arguments and that of others. I have always said that robust debates are welcome. I do not have love lost for Republicans. That does not mean that one has to love Democrats in the United States. Nor do I have particular affection for Trump. It is my contrarian instinct that is at work here, on seeing the one-sided coverage and blatant media bias. Pl. check out PRof. Stephen Cohen’s 3-minute exchange here: It is an eye-opener. Much of the world’s ills can be laid down as much on Obama policies that followed the 2008 crisis and on Clinton policies before 2000, as they can be on Bush policies before 2008. Jon Hilsenrath’s two recent long articles in WSJ are eye-openers. Trump had nothing to do with them.


  2. I hope “combative” doesn’t mean somehow unwelcome.;) In fact, I wasn’t being particularly so, I thought, in my comment though if you thought my view on Trump made it so I hardly think its controversial or even arguable, by most right (emphasize) thinking people. As regards not having skin in the game, I would submit you do as what the US does, does affect countries everywhere even if you can’t vote in US elections (neither can I, btw).

    As regards lying by Hilary and the McCarthyism and mendacity of “left”-wing media (talk about combative!) — these all sound similar to the talking points of extreme right-wing, smear media. I agree she’s not perfect, and her judgement too is suspect on some issues, but there is a difference between a lying cynic (Hilary, as regards trying to be mass-appeal when she isn’t but does want to do good) and a cynical liar (as regards Trump who is plainly appealing to base instincts for personal, not national, aggrandizement). Like democracy itself, if one looks at what is the least bad candidate then suddenly the choice is clear and a candidate indeed does look good.


    1. Thank you, JS for the comment again. Being labelled combative, on this occasion, was neither a criticism nor a backhanded compliment.

      It is quite funny how you so easily and casually dismiss my comments: ‘these all sound similar to the talking points of extreme right-wing, smear media.’

      whereas your observation about Trump “inveterate lying, humbug candidate with the intellectual prowess of a senior-grade bully and moral consistency the equivalent of jello” was different?

      Then, there is the nod towards objectivity: “I agree she’s not perfect, and her judgement too is suspect on some issues…”

      It is all right for you to have a strong judgement on either candidate just as I have, but let us be clear that they are our judgements and are not the same as facts.


  3. Extremely interesting research, puts empirical heft & certainty behind intuitive, observed phenomena. Though the European employment in manufacturing not declining-argument is weak — perhaps there was no change in European employment in mfg after US granted PNTR to China because smaller W European countries specialized in different, higher value-added niches whereas the US had a vast mfg structure that included low value-add industries as behooving its much larger economic size? Also, I don’t think the paper discusses what happened to European mfg employment, per se, after they granted PNTR to China in the 80s?

    Your assertion that Trump is right implies some kind of tacit support for his candidacy. If not, then of course disregard this statement but if it does than trusting the word of this inveterate lying, humbug candidate with the intellectual prowess of a senior-grade bully and moral consistency the equivalent of jello is an exercise in futility as he will not be able to understand or manage, leave only change, any of these global forces at play here.


    1. Welcome back. As combative as ever. Yes, the paper does not discuss what happened to European Mfg. employment in the 1980s after they granted PNTR to China. I had mentioned that in my post as well.

      Well, as for Trump, I have no skin in the game. I am not an American voter. That said, I thought inveterate lying was the sole preserve and monopoly of the other candidate.

      The neo-McCarthyism of the so-called Liberals in the media and of other Clinton supporters and their mendacity are vastly grating, however.


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