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A Factor Augmentation Formulation of the Value of International Trade

Listed author(s):
  • Daniel Bernhofen
  • John Brown

We develop a two-country, two-sector model with a continuum of workers to address the link between migration and trade where policy is determined by a simple referendum. In particular, we address two questions. First, are states already in free trade areas more likely to support full integration than states without free trade? Second, is trade liberalization more likely to be supported by a simultaneous referendum on trade and migration than in one on trade alone? The key to our analysis is the recognition that for free trade, migration, or trade and migration to be adopted, the relevant policy must pass the referendum in both countries. We identify conditions under which that occurs. Our model provides an interpretation of the evolution of the politics of economic integration related to NAFTA and European Union.

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File URL: http://www.nottingham.ac.uk/gep/documents/papers/2012/12-05.pdf
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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 12/05.

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Handle: RePEc:not:notgep:12/05
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School of Economics University of Nottingham University Park Nottingham NG7 2RD

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Web page: http://www.nottingham.ac.uk/gep/index.aspx

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  1. Yong-Seok Choi & Pravin Krishna, 2004. "The Factor Content of Bilateral Trade: An Empirical Test," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 887-914, August.
  2. Daniel M. Bernhofen & John C. Brown, 2005. "An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan," American Economic Review, American Economic Association, vol. 95(1), pages 208-225, March.
  3. Keith E. Maskus, 1991. "Comparing International Trade Data and Product and National Characteristics Data for the Analysis of Trade Models," NBER Chapters,in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 17-60 National Bureau of Economic Research, Inc.
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