We incorporate culture into a standard trade model in two distinct ways. In the ¡°cultural affinity from work¡± model, workers receive a non- pecuniary cultural benefit from work in a particular industry. In the ¡°cultural externality¡± model, consumers of a product receive utility from other consumer¡¯s consumption of a domestic good. We show that resistance to change due to cultural concerns can reduce the national benefits from trade liberalization. Complete movements to free trade will have a positive national welfare impact in the cultural affinity case whereas it may lower national welfare in the cultural externality case. We also show that a loss of cultural benefits is more likely to occur in the externality model.
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Paper provided by EconWPA in its series International Trade with number
0511003.
Find related papers by JEL classification: F1 - International Economics - - Trade Z1 - Other Special Topics - - Cultural Economics F11 - International Economics - - Trade - - - Neoclassical Models of Trade F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
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