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The Labour Market Consequences of the Canada-U.S. Free Trade Agreement

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Author Info
Noel Gaston
Daniel Trefler

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Abstract

The Canada-U.S. Free Trade Agreement (FTA) was expected to reallocate workers from high-cost firms to low-cost firms, thus promoting specialization and trade creation. Instead, employment contracted across all industries during 1989-93 and real exports and imports contracted over most of the period. This trade destruction provides some evidence that the massive 1989-93 Canadian job losses were not primarily caused by the FTA. Th authors further show that FTA tariff cuts account for no more than 15 percent of the Canadian job losses. Restated, other factors (including the fight against inflation) explain more than 85 percent of the job losses.

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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 30 (1997)
Issue (Month): 1 (February)
Pages: 18-41
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Handle: RePEc:cje:issued:v:30:y:1997:i:1:p:18-41

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  1. Larochelle-Côté, Sébastien, 2005. "Summary Of: Tariff Reduction and Employment in Canadian Manufacturing, 1988-1994," Analytical Studies Branch Research Paper Series 2005259e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  2. Amiti, Mary & Konings, Jozef, 2005. "Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia," CEPR Discussion Papers 5104, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Tom Krebs & Pravin Krishna & William Maloney, 2005. "Trade Policy, Income Risk, and Welfare," NBER Working Papers 11255, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Baggs, Jennifer & Brander, James A., 2005. "Libéralisation des échanges, rentabilité et levier financier," Direction des études analytiques : documents de recherche 2005256f, Statistics Canada, Direction des études analytiques. [Downloadable!]
  5. Martin Gassebner & Noel Gaston & Michael Lamla, 2006. "Relief for the Environment? The Importance of an Increasingly Unimportant Industrial Sector," Working papers 06-130, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
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  6. Rossana Patrón, 1999. "The imperfect mobility of labour: Going from theory to ‘virtual’ reality. Simulations with simple trade models," Documentos de Trabajo (working papers) 2299, Department of Economics - dECON. [Downloadable!]
  7. Ian Keay, 2001. "An Empty Promise: Average Cost Savings and Scale Economies Among Canadian and American Manufacturers, 1910-1998," Working Papers 1002, Queen's University, Department of Economics. [Downloadable!]
  8. Hoekman & Bernard & Winters, L. Alan, 2005. "Trade and employment : stylized facts and research findings," Policy Research Working Paper Series 3676, The World Bank. [Downloadable!]
  9. Baggs, Jennifer & Brander, James A., 2005. "Trade Liberalization, Profitability, and Financial Leverage," Analytical Studies Branch Research Paper Series 2005256e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
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  10. Richard P. Chaykowski, 2002. "Globalization and the Modernization of Canadian Labour Policy," Canadian Public Policy, University of Toronto Press, vol. 28(1), pages 81-91, March. [Downloadable!] (restricted)
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