Abstract
This study examines the relationship between international trade exposure and wages in the U.S. automobile industry. Motivated by theoretical predictions from international trade models suggesting that increased trade may contribute to wage inequality between higher-skilled and lower-skilled workers, the research initially aimed to evaluate how foreign competition affects wage distribution within the industry. Due to limitations in available data, the empirical analysis focuses specifically on wages for production and nonsupervisory workers as a proxy for lower-skilled labor.
Using annual industry-level data from 2000 to 2023, the study estimates time-series regression models relating wages to measures of foreign competition, including import penetration and foreign market share. The analysis controls for employment in motor vehicle manufacturing, labor productivity, industry output growth, and long-term trends. To assess the robustness of the results, alternative model specifications are estimated, including a regression using foreign market share as an alternative measure of trade exposure and a specification using inflation-adjusted real wages.
The baseline results indicate a positive association between foreign competition and nominal wages for production and nonsupervisory workers. However, additional robustness checks using alternative specifications suggest that the relationship between import penetration and wages becomes weaker or negative when inflation adjustments and alternative forms of wage are considered. The alternative specifications include regressions using real wages, the natural logarithm of real wages, and the first difference of real wages. These findings highlight the importance of accounting for inflation and model specification when evaluating the labor market effects of international trade.
Advisor
Tian, Huiting
Department
Business Economics; Economics
Recommended Citation
Weidinger, Théo, "Liberalized Trade and Wage Inequality: Observing How Liberalization Increases Market Concentration and Puts Pressures on Wage Inequality and Labor Market Preferences in the U.S. Automobile Industry" (2026). Senior Independent Study Theses. Paper 13415.
https://openworks.wooster.edu/independentstudy/13415
Disciplines
Econometrics | Income Distribution | International Economics | Labor Economics
Keywords
International Trade, Market Competition, Wage Inequality
Publication Date
2026
Degree Granted
Bachelor of Arts
Document Type
Senior Independent Study Thesis
© Copyright 2026 Théo Weidinger