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The Impact of the 1932 General Tariff: A Difference-in-Difference Approach

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Abstract

We evaluate the effect of the 1932 British General Tariff on the output, labour productivity and employment growth of British industries. We provide a new disaggregated data set that matches industry-level Census of Production data with industry-specific tariff rates to accurately isolate treatment and control groups and estimate the effect of the General Tariff using difference-in-difference regressions. We evaluate a two-group comparison, between newly and non-newly protected industries, and a three-group comparison, between non-newly protected industries and newly protected industries further divided into those given a baseline 10 percent tariff rate and those given additional tariffs. In the two-group comparison, we identify a tariff effect that is large and statistically significant on output and productivity. In the three-group comparison, we show that the positive output and productivity effects of the tariff arise from the additional tariff protection, over and above the 10 percent level. These effects are observed over the periods 1930-35 and 1930-48, suggesting both short-run and medium-term effects on output and productivity of UK industries protected by the 1932 General tariff.

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  • Lloyd, S. & Solomou, S., 2019. "The Impact of the 1932 General Tariff: A Difference-in-Difference Approach," Cambridge Working Papers in Economics 1940, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1940
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    1. De Bromhead, Alan & Fernihough, Alan & Lampe, Markus & O'Rourke, Kevin H., 2017. "When Britain turned inward: Protection and the shift towards Empire in interwar Britain," QUCEH Working Paper Series 2017-02, Queen's University Belfast, Queen's University Centre for Economic History.
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    Cited by:

    1. Brian D. Varian, 2024. "Market integration and a lower-productivity economy: the case of Australian federation and Queensland’s manufacturing sector, 1897–1906," CEH Discussion Papers 06, Centre for Economic History, Research School of Economics, Australian National University.

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    More about this item

    Keywords

    Trade Policy; General Tariff; Difference-in-Difference;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • N64 - Economic History - - Manufacturing and Construction - - - Europe: 1913-

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