HOME 정보검색 검색결과상세정보

American Economic Review
Nashville : American Economic Association
ISSN : 0002-8282

Regional Effects of Trade Reform: What is the Correct Measure of Liberalization?


Brian K. Kovak | Carnegie Mellon University |

Vol.103 No.5 , pp.1960 ~ 1976



Over the last 40 years, trade barriers around the world have fallen to historically low levels. As part of this process, many developing countries abandoned import substituting industrialization policies by sharply lowering trade barriers, motivating a large literature examining the effects of trade liberalization on various national labor market outcomes such as poverty and inequality. The focus on national outcomes follows the approach of classical trade theory, which takes the country as the geographic unit of analysis. A small but growing literature takes a different approach, examining the effects of trade liberalization on labor market outcomes at the subnational level. The papers in this literature measure the local effect of liberalization using a weighted-average of changes in trade policy, with weights based on the industrial distribution of labor in each region. In this article, I develop a specific-factors model of regional economies that yields a very similar weighted average relationship between regional wage changes and liberalization-induced price changes across industries. The model provides a theoretical foundation for this intuitively appealing empirical approach and provides guidance on important choices faced by researchers when constructing regional measures of trade liberalization. The model shows that liberalization in a particular industry will have a larger effect on local wages when (i) liberalization has a larger effect on the prices faced by pr


>> I. Specific-Factors Model of Regional Economies
>> >> A. Price Changes’ Effects on Regional Wages
>> >> B. Nontraded Sector
>> II. Data
>> III. Trade Liberalization in Brazil
>> >> A. Context and Details of Brazil’s Trade Liberalization
>> >> B. Exogeneity of Tariff Changes to Industry Performance
>> IV. The Effect of Liberalization on Regional Wages
>> >> A. Regional Wage Changes
>> >> B. Region-Level Tariff Changes
>> >> C. Wage-Tariff Relationship
>> V. Conclusion


  • Blanchard, Olivier Jean | Lawrence F. Katz (1992) , Regional Evolutions , Brookings Papers on Economic Activity , pp.1 ~ 61
  • Goldberg, Pinelopi Koujianou | Nina Pavcnik (2005) , Trade, Wages, and the Political Economy of Trade Protection: Evidence from the Colombian Trade Reforms , Journal of International Economics , VOL.66 No.1 , pp.75 ~ 105
  • Jones, Ronald W. (1975) , Income Distribution and Effective Protection in a Multicommodity Trade Model , Journal of Economic Theory , VOL.11 No.1 , pp.1 ~ 15