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Beyond Brigden: Australia’s Pre-War Manufacturing Tariffs, Real Wages and Economic Size

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  • Rod Tyers

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  • William Coleman

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Abstract

Like many industrialised economies in the pre-depression era, Australia elected to maintain a highly protectionist trade policy regime and hence to retard its integration with the global economy. The rationale for Australia’s protectionism was, as elsewhere, the enhancement of worker welfare. The Brigden Report offered a pre-Stolper-Samuelson recognition that protection of labour intensive industries would bolster Australia’s real wage, though the Report did not highlight the further consequence that this would attract European migrants. Brigden’s wage effect mirrors the subsequent Stolper-Samuelson Theorem and Heckscher-Ohlin-Samuelson (HOS) model yet it has still more advanced elements. We illustrate it using the strict two-sector HOS model and a more modern version with differentiated products, three sectors, including a non-traded services sector, natural resources as a specific factor and foreign ownership of domestic capital. While ever production remains diversified, the HOS model with elastic migration does not support a unique link between a single region’s protection and its labour endowment. The more modern model does yield this link, however, suggesting that protection might indeed have fostered, at least temporarily, immigration, capital inflow and overall economic expansion in Australia.

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Bibliographic Info

Paper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2005-456.

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Length: 27 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:acb:cbeeco:2005-456

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  1. Manger, Gary J, 1981. "The Australian Case for Protection Reconsidered," Australian Economic Papers, Wiley Blackwell, vol. 20(37), pages 193-204, December.
  2. Donald R. Davis, 1996. "Does European Unemployment Prop Up American Wages?," Harvard Institute of Economic Research Working Papers 1752, Harvard - Institute of Economic Research.
  3. J. B. Brigden, 1927. "The Australian Tariff. And The Standard Of Living: A Rejoinder," The Economic Record, The Economic Society of Australia, vol. 3(1), pages 102-116, 05.
  4. Tyers, R. & Yang, Y., 1999. "European Unemployment, US Wages, and the Asian Emergence," Papers 367, Australian National University - Department of Economics.
  5. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec..
  6. J. B. Brigden, 1927. "Comment On Mr. Benham'S Restatement," The Economic Record, The Economic Society of Australia, vol. 3(2), pages 249-251, November.
  7. J. B. Briqden, 1925. "The Australian Tariff And The Standard Of Living," The Economic Record, The Economic Society of Australia, vol. 1(1), pages 29-46, November.
  8. Brecher, Richard A, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 88(1), pages 98-116, February.
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Cited by:
  1. Yuwen Dai, 2007. "Macro Regime and Economic Growth in China," DEGIT Conference Papers c012_015, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Aaron Walker & Rod Tyers, 2013. "Quantifying Australia's "Three Speed" Boom," Economics Discussion / Working Papers 13-06, The University of Western Australia, Department of Economics.

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