Tariffs and the Composition of Employment: Evidence from the Canada-U.S. Free Trade Agreement

39 Pages Posted: 29 Jun 2018 Last revised: 7 Oct 2018

See all articles by Jeff Chan

Jeff Chan

Wilfrid Laurier University

Date Written: September 23, 2018

Abstract

I analyze the effect of the Canada-U.S. Free Trade Agreement (CUSFTA) on the composition of employment at the local labour market level in Canada. I construct local labour market-level changes in tariffs for both exports and imports, exploiting regional differences in pre-CUSFTA industrial composition to obtain variation in the degree to which CUSFTA affected localities across Canada. I find that Census Divisions which experienced larger Canadian tariff cuts against U.S. imports experienced higher rates of self-employment. Census Divisions with larger American tariff cuts against Canadian goods correspondingly experienced lower rates of self-employment. These self-employment effects are dampened in Census Divisions with higher initial shares of educated people, immigrants, and female workers. I do not find any evidence that part-time employment was affected by CUSFTA tariff cuts. The findings in this paper provide evidence that increasing trade openness between two developed countries can affect the prevalence of self-employment.

Keywords: tariffs, local labour markets, free trade agreements

JEL Classification: F14, F61, F66

Suggested Citation

Chan, Jeff, Tariffs and the Composition of Employment: Evidence from the Canada-U.S. Free Trade Agreement (September 23, 2018). Available at SSRN: https://ssrn.com/abstract=3200170 or http://dx.doi.org/10.2139/ssrn.3200170

Jeff Chan (Contact Author)

Wilfrid Laurier University ( email )

75 University Avenue West
Waterloo, Ontario N2L 3C5
Canada

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