The Canada‐U.S. Free Trade Agreement and labour market adjustment in Canada

Abstract

Evidence suggests that the Canada-U.S. Free Trade Agreement (CUSTA) had almost no effect on earnings and had a small negative effect on manufacturing employment. Theory suggests that a change in trade policy may affect skilled and less-skilled workers differently. The labour market consequences of CUSTA tariff reductions are analysed in this paper. It is found that the tariff reductions lowered employment predominantly among lessskilled workers but did not affect the earnings of either skilled or less-skilled workers. The employment effects are due to the fact that relatively less-skill-intensive industries were more highly protected than high-skill-intensive industries prior to CUSTA. L'accord de libre échange Canada-US et l'adjustement du marché du travail au Canada.On montre que l'accord de libre échange Canada-US n'a eu presque pas d'effet sur les gains et un impact négatif faible sur l'emploi dans le secteur manufacturier. La théorie suggère qu'un changement dans la politique commerciale peut avoir un effet différent sur les travailleurs qualifiés et moins qualifiés. Le mémoire analyse les effets des réductions dans les droits de douane sur le marché du travail. Il appert que les réductions des tarifs douaniers ont eu des effets négatifs sur l'emploi des moins qualifiés mais n'ont pas affecté le niveau des gains des qualifiés et des moins qualifiés. Les effets d'emploi sont attribuables au fait que les industries engageant des personnes relativement moins qualifiées étaient davantage protégés avant l'accord de libre échange que les industries employant une main d'oeuvre plus qualifiée. This paper benefited from helpful discussions with * The exchange rate is the log difference of the average bilateral U.S. / Canada dollar exchange rate. ** The interest rate variable is the change in the spread between Canadian and U.S. interest rates. (1) denotes significance at the 10 per cent level; (2) denotes significance at the 5 per cent level; and (3) denotes significance at the 1 per cent level.

When working is not enough: food insecurity in the Canadian labour force

“…To find that industry of employment determines food insecurity risk after accounting for skill level suggests that workers are not mobile across industries. This lack of inter-industry mobility has been identified in studies examining the impact of Canada-USA free trade on Canadian workers (19,20) . We also found an over-representation of Aboriginal and visible minority groups among the working food insecure, consistent with their over-representation in the food-insecure population as a whole (8) .…”

“…Finally, because skilled and unskilled workers are not interchangeable for employers (9,(17)(18)(19)(20)(21) , it may be that labour market conditions and outcomes differ across skill groups, which in turn affects the risk of a household being food insecure (8) . Using education level as a proxy measure for skill level in the context of the workplace, for an examination of educational attainment and food insecurity by industrial sector, we stratified our sample according to the primary earner's educational attainment.…”

Effects of Trade on Female Labor Force Participation

“…In particular, liberalization of goods markets appears to have a sizable effect on employment but a rather small effect on wages (Grossman 1987, Revenga 1992, Gaston and Trefler 1994, Beaulieu 2000, Ebenstein, Harrison, McMillan, and Phillips 2011. This asymmetry may be a result of labor reallocation itself, which tends to erase wage differentials and mitigate wage effects.…”

An Empty Promise: Average Cost Savings and Scale Economies among Canadian and American Manufacturers, 1910-1988

“…may be observed in the absence of collusion among firms. 5 In addition to the work referred to in this section, see Eastman and Stykolt, 1967 major gains from free trade. .…”