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Tariff Elimination and the Wage Gap in an Industrial Specific Factors Model *
Author(s) -
Thompson Henry,
Francis John
Publication year - 2009
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2008.00786.x
Subject(s) - economics , tariff , elasticity of substitution , wage , labour economics , capital (architecture) , manufacturing , real wages , production (economics) , microeconomics , international economics , business , marketing , history , archaeology
A specific factors model of 458 US manufacturing industries simulates the effects of eliminating manufacturing tariffs on unskilled and skilled wages. The model assumes constant elasticity substitution, industry‐specific capital inputs, and mobile unskilled and skilled labor. Tariff elimination slightly lowers both unskilled and skilled wages, and increases the skilled wage gap. Industry outputs and capital returns absorb the negative impact of the falling tariffs with losses concentrated in more highly protected industries and most industries enjoying small positive outcomes.