The Economics and Politics of Revoking NAFTA

Raphael Auer, Barthélémy Bonadio and Andrei Levchenko

IMF Economic Review, 2020, vol. 68, issue 1, No 8, 230-267

Abstract: Abstract We provide a quantitative assessment of both the aggregate and the distributional effects of revoking NAFTA using a multi-country, multi-sector, multi-factor model of world production and trade with global input–output linkages. Revoking NAFTA would reduce US welfare by about 0.2%, and Canadian and Mexican welfare by about 2%. The distributional impacts of revoking NAFTA across workers in different sectors are an order of magnitude larger in all three countries, ranging from − 2.7 to 2.23% in the USA. We combine the quantitative results with information on the geographic distribution of sectoral employment, and compute average real wage changes in each US congressional district, Mexican state, and Canadian province. We then examine the political correlates of the economic effects. Congressional district-level real wage changes are negatively correlated with the Trump vote share in 2016: districts that voted more for Trump would on average experience greater real wage reductions if NAFTA is revoked.

JEL-codes: F11 F13 F16 F62 J62 R13 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1057/s41308-019-00096-y Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The economics and politics of revoking NAFTA (2018)
Working Paper: The Economics and Politics of Revoking NAFTA (2018)
Working Paper: The Economics and Politics of Revoking NAFTA (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:imfecr:v:68:y:2020:i:1:d:10.1057_s41308-019-00096-y

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

DOI: 10.1057/s41308-019-00096-y

Access Statistics for this article

More articles in IMF Economic Review from Palgrave Macmillan, International Monetary Fund
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().