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U.S. Production Technology and the Effects of Imports on the Demand for Primary Factors

Christis G. Tombazos
The Review of Economics and Statistics
Vol. 80, No. 3 (Aug., 1998), pp. 480-483
Published by: The MIT Press
Stable URL: http://www.jstor.org/stable/2646756
Page Count: 4
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U.S. Production Technology and the Effects of Imports on the Demand for Primary Factors
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Abstract

We employ a unit cost function, in the context of the production theory approach, to estimate the Allen-Uzawa effect of various categories of imports on U.S. primary factors. To circumvent curvature-related problems, often associated with similar studies that do not invoke separability, we combine the global imposition of concavity with a symmetric normalized quadratic representation of the unit cost function (which remains flexible after curvature enforcing reparameterizations). Challenging conventional wisdom, we find that the positive, downstream-production-related, employment effects of the majority of imports are significant enough to produce a detectable net increase in labor demand.

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