This paper develops a model of used vehicle trade between the United States and Mexico, countries with different environmental regulations regarding vehicle emissions. We demonstrate that the United States, with its strict environmental regulations, has a motive to export used vehicles to Mexico, which impacts air pollution emissions from vehicle driving in Mexico. Using unique data on the import and registration of vehicles in Mexico after NAFTA, we find that Mexico's used vehicle imports reduce pollution emissions generated from vehicle driving mainly because of the technique effect, that is, model–age‐comparable vehicles imported from the United States emit less than those originally operated in Mexico.

We construct the ratio of the post-fisc to the pre-fisc transitory component of the variance of family incomes in Canada from 1993 and 2008. The ratio measures how much the tax and transfer system attenuates market income instability. It is shown that the ratio of variances is equivalent theoretically to the concept of residual income progression. The fiscal system became less stabilizing beginning in the late 1990s, especially for families headed by main earners with less than high school education. The trend is attributable to personal income tax reforms and reductions in transfers for lower income families.

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