The Long-Run Labor Market Effects of the Canada-U.S. Free Trade Agreement

Brian Kovak and Peter Morrow

No 29793, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper assesses the long-run effects of the 1988 Canada-U.S. Free Trade Agreement (CUSFTA) on the Canadian labor market using matched longitudinal administrative data for the years 1984-2004. We simultaneously examine the labor market effects of increased export expansion and import competition, generally finding adverse effects of Canadian tariff cuts and favorable effects of U.S. cuts, though both effects are small. Workers initially employed in industries that experienced larger Canadian tariff concessions exhibit a heightened probability of layoffs at large firms, but little impact on long-run cumulative earnings. Lower earnings and years worked at the initial employer are offset by gains in other manufacturing industries, construction, and services. Canadian workers quickly transitioned out of industries facing import competition, with the majority of industry adjustment occurring among new entrants to the labor market.

JEL-codes: F13 F16 F66 J23 J31 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-int and nep-lma
Note: ITI LS
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