Discussion Paper
Competition and the Decline of the Rust Belt
Ohanian, Lee E. (2014-12-20)
The decline of the heavy manufacturing industry in the American ?Rust Belt? is often thought to have begun in the late 1970s, when the United States suffered a significant recession. But theory suggests, and data support, that the Rust Belt?s decline started in the 1950s when the region?s dominant industries faced virtually no product or labor competition and therefore had little incentive to innovate or become more productive. As foreign imports increased and manufacturing shifted to the American South, the Rust Belt?s share of manufacturing jobs and total jobs declined dramatically. ...
Economic Policy Paper , Paper 14-6