Submitted by CARPE DIEM

From a comment from Spencer about this CD post:

“Is this how they teach you do do econmic (sic) analysis at GMU?You should compare the percent increases rather then (sic) the absolute numbers. Take the payroll number you use, for example. You show a gain of 21.4 million in the first period and 25.6 million in the second. The gain in the first period is 24% while the gain in the second period is 13%. That means that job gains after NAFTA were nearly cut in half.”

Actually, using these payroll data from the BLS (via FRED), the percentage increase from January 1980 (90,800,000) to December 1993 (112,206,000) is 23.57%, and the percentage increase from January 1994 (112,474,000) to December 2007 (138,119,000) is 22.80%, and not 13%! In other words, on a percent change basis, job growth in the 14-year period before NAFTA was almost exactly the same as the 14-year period after NAFTA.

For a more sophisticated statistical analysis, see the chart above with results of a difference-in-means t-test of the null hypothesis that there is no difference in monthly job growth in the pre-NAFTA and post-NAFTA periods. The results suggest that there is no statistical difference in job growth during the 1980-1993 period and the 1994-2007 period. Further, especially for payroll employment, the variability of monthly job growth (measured by the standard deviation) was much lower post-NAFTA (.1300%) than pre-NAFTA (.2152%), suggesting much greater stability in job growth after NAFTA.

Bottom Line: NAFTA had no statistically significant effect on U.S. job growth.

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