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Jobs, Jobs, Jobs: A New Perspective on Protectionism

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Author Info
Arnaud Costenot (University of California, San Diego)
Abstract

This paper analyzes the determinants of protectionism in a small open economy with search frictions a la PISSARIDES (2000). In equilibrium, jobs generate rents in each sector. Like in the Ricardo-Viner model, the magnitude of those rents may depend on the level of trade protection. The distinct feature of our model is that trade protection may also affect the access to those rents. By raising the domestic price of a given good, a government may attract more firms in a given industry. This raises the probability that a worker will find a job in this sector, and in turn, will benefit from the associated rents. Though simple, our model may help explain a variety of stylized facts regarding the structure of trade protection and individual trade-policy preferences.

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Paper provided by Department of Economics, UC San Diego in its series University of California at San Diego, Economics Working Paper Series with number 2006-05.

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Date of creation: 01 Jul 2006
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Handle: RePEc:cdl:ucsdec:2006-05

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Related research
Keywords: search frictions; trade protection; trade-policy preferences;

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  17. Mayda, Anna Maria & Rodrik, Dani, 2005. "Why are some people (and countries) more protectionist than others?," European Economic Review, Elsevier, vol. 49(6), pages 1393-1430, August. [Downloadable!] (restricted)
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    Other versions:
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