United States concessions in the Kennedy Round and short-run labor adjustment costs

This paper reports on an econometric analysis of the exemptions awarded to United States industries from the across-the-board 50 percent tariff cut imposed in the Kennedy Round. It is shown that as much as 50 percent of the inter-industry variation in reductions in nominal tariff and non-tariff rates may be accounted for by variables that proxy labor adjustment costs. In particular, certain industrial characteristics are significantly related to the Kennedy Round reductions: declining industries, and industries with a high proportion of unskilled or old workers, are associated with low reductions.