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Trade Liberalization and Inequality in Canada in the 1990s

In: The Review of Economic Performance and Social Progress 2001: The Longest Decade: Canada in the 1990s

Author

Listed:
  • Daniel Schwanen

    (Scientist at the Institute for Work and Health)

Abstract

In this chapter, Daniel Schwanen addresses the impact of the major trade liberalization efforts undertaken by Canada and its trading partners beginning with the Canada-U.S. Free Trade Agreement (FTA) in 1989. The author focuses in particular on the question of whether liberalized trade could have been a factor behind the emergence of greater inequalities in Canada in the 1990s. The author divides Canadian manufacturing industries into five groups according to their sensitivity to trade liberalization in the 1990s and to the direction taken by exports and imports following the opening of trade. Schwanen concludes from this exercise that more open trade may have contributed to inequalities in Canada, by favoring certain groups already doing relatively well, while being unfavourable to many less-skilled and lesser-paid groups.

Suggested Citation

  • Daniel Schwanen, 2001. "Trade Liberalization and Inequality in Canada in the 1990s," The Review of Economic Performance and Social Progress, in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Di (ed.), The Review of Economic Performance and Social Progress 2001: The Longest Decade: Canada in the 1990s, volume 1, Centre for the Study of Living Standards;The Institutute for Research on Public Policy.
    • Handle: RePEc:sls:repsls:v:1:y:2001:ds
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    References listed on IDEAS

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    1. Jeffrey G. Williamson, 1998. "Globalization, Labor Markets and Policy Backlash in the Past," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 51-72, Fall.
    2. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    3. Eugene Beaulieu, 2000. "The Canada‐U.S. Free Trade Agreement and labour market adjustment in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(2), pages 540-563, May.
    4. Paul Segerstrom & Elias Dinopoulos, 1999. "A Schumpeterian Model of Protection and Relative Wages," American Economic Review, American Economic Association, vol. 89(3), pages 450-472, June.
    5. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 121-144, Spring.
    6. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    7. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
    8. Carolyn Kwan, 2000. "Restructuring in the Canadian Economy: A Survey of Firms," Bank of Canada Review, Bank of Canada, vol. 2000(Summer), pages 15-26.
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    Keywords

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    JEL classification:

    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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