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The Structure of Tariffs and Long-Term Growth

  • Nathan Nunn

    ()

  • Daniel Trefler

    ()

We show that the ‘skill-bias’ of a country’s tariff structure is positively correlated with long-term per capita GDP growth. Testing for causal mechanisms, we find evidence consistent with the existence of real benefits from tariffs focused in skill-intensive industries. However, this only accounts for a quarter of the total correlation between skill-biased tariffs and growth. Turning to alternative explanations, we extend the standard Grossman-Helpman ‘protection-for-sale’ model and show how the skill-bias of tariffs can reflect the extent of domestic rent-seeking activities in the economy. We provide evidence that the remaining variation is explained by this endogeneity.[Working Paper No.]

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Date of creation: Jun 2010
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Handle: RePEc:ess:wpaper:id:2614
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