Were Trade and Factor Mobility Substitutes in History?

49 Pages Posted: 10 Jun 2000 Last revised: 6 Oct 2010

See all articles by William J. Collins

William J. Collins

Vanderbilt University - College of Arts and Science - Department of Economics; The Brookings Institution; National Bureau of Economic Research (NBER)

Kevin H. O'Rourke

University of Dublin, Trinity College; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus; Honorary Fellow, University of Wisconsin - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: June 1997

Abstract

Trade theorists have come to understand that their theory is ambiguous on the question: Are trade and factor flows substitutes? While this sounds like an open invitation for empirical research, hardly any serious econometric work has appeared in the literature. This paper uses history to fill the gap. It treats the experience of the Atlantic economy between 1870 and 1940 as panel data with almost seven hundred observations. When shorter run business cycles and long swings' are extracted from the panel data, substitutability is soundly rejected. When secular relationships are extracted over longer time periods and across trading partners, once again substitutability is soundly rejected. Finally, the paper explores immigration policy and finds that policy makers never behaved as if they viewed trade and immigration as substitutes.

Suggested Citation

Collins, William J. and O'Rourke, Kevin H. and Williamson, Jeffrey G., Were Trade and Factor Mobility Substitutes in History? (June 1997). NBER Working Paper No. w6059. Available at SSRN: https://ssrn.com/abstract=226469

William J. Collins (Contact Author)

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

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Kevin H. O'Rourke

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Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus ( email )

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