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American Economic Review: Vol. 96 No. 1 (March 2006)

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Do Labor Issues Matter in the Determination of U.S. Trade Policy? An Empirical Reevaluation

Article Citation

Matschke, Xenia, and Shane M. Sherlund. 2006. "Do Labor Issues Matter in the Determination of U.S. Trade Policy? An Empirical Reevaluation." American Economic Review, 96(1): 405-421.

DOI: 10.1257/000282806776157524

Abstract

Some recent empirical studies, motivated by Grossman and Helpman's (1994) "protection-for-sale" model, suggest that very few factors (none of them labor related) determine trade protection. This paper reexamines the roles that labor issues play in the determination of trade policy. We introduce collective bargaining, differences in inter industry labor mobility, and trade union lobbying into the protection-for-sale model, and show that the equilibrium protection rate in our model depends upon these labor market variables. We test our model predictions using data from U.S. manufacturing and find that labor market considerations do seem to matter for U.S. trade policy.

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Authors

Matschke, Xenia
Sherlund, Shane M.


American Economic Review


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