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The long and short of the Canada-U.S. free trade agreement

Trefler, Daniel (2006) The long and short of the Canada-U.S. free trade agreement. EI (41). Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.

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Abstract

The Canada-U.S. Free Trade Agreement (FTA) provides a unique window onto the effects of a reciprocal trade agreement on an industrialized economy (Canada). For industries that experienced the deepest Canadian tariff cuts, employment fell by 12 percent and labour productivity rose by 15 percent as low-productivity plants contracted. For industries that received the largest U.S. tariff cuts, there were no employment gains, but plant-level labour productivity soared by 14 percent. These results highlight the conflict between those who bore the short-run adjustment costs (displaced workers and struggling plants) and those who are garnering the long-run gains (consumers and efficient plants). Finally, a simple welfare analysis provides evidence of aggregate welfare gains.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk
Additional Information: © 2006 the author
Divisions: STICERD
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Collections > United States Collection
Date Deposited: 08 Jul 2008 14:52
Last Modified: 14 May 2020 23:31
URI: http://eprints.lse.ac.uk/id/eprint/6721

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