Tariff Elimination and the Wage Gap in an Industrial Specific Factors Model* |
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| Authors: | Henry Thompson John Francis |
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| Institution: | 1. Economics, Comer Hall, Auburn University, USA;2. Department of Economics and Finance, College of Business, Louisiana Tech University, USA |
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| Abstract: | A specific factors model of 458 US manufacturing industries simulates the effects of eliminating manufacturing tariffs on unskilled and skilled wages. The model assumes constant elasticity substitution, industry‐specific capital inputs, and mobile unskilled and skilled labor. Tariff elimination slightly lowers both unskilled and skilled wages, and increases the skilled wage gap. Industry outputs and capital returns absorb the negative impact of the falling tariffs with losses concentrated in more highly protected industries and most industries enjoying small positive outcomes. |
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