The fall of the Rust Belt extends back to the 1950s, when Rust Belt firms such as General Motors and U.S. But this view is misleading and belies an important reason the Rust Belt declined so much and has never fully recovered. manufacturing struggled after that (see, for example, Dictionary of American History 2003). It’s commonly believed that the American “Rust Belt”-the heavy manufacturing region primarily bordering the Great Lakes-began to decline economically during the severe recessions of the late 1970s and early 1980s, and continued to decline as U.S. ![]() ![]() These results imply that vigorous competitive pressure in both product and labor markets is important for creating the incentives for firms to continuously innovate, create and grow, and that government policy should encourage such competition. Our model suggests that this factor-lack of competitive pressure-accounts for about two-thirds of the Rust Belt’s decline in employment share. Eventually the region’s manufacturers began to innovate, resulting in a stabilization of employment share at a significantly lower level. 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.Īs foreign imports increased and manufacturing shifted to the American South, the Rust Belt’s share of manufacturing jobs and total jobs declined dramatically. 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. The views expressed here are those of the authors, not necessarily those of others in the Federal Reserve System. The papers are an occasional series for a general audience.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |