PHASING IN AND PHASING OUT PROTECTIONISM WITH COSTLY ADJUSTMENTS OF LABOUR

Larry Karp and Thierry Paul

No 51112, Working Papers from International Agricultural Trade Research Consortium

Abstract: We study the dynamics of optimal trade policy in a model with costly inter-sectoral adjustment of labour, where migrants pay less than the marginal social cost of migration. If workers have rational expectations, a future tariff has an announcement effect on the current migration decision. If the government is able to commit itself to future policy, the optimal trajectory involves phasing in and then phasing out protection of the dying sector. This contrasts with recommendations of gradual liberalization. Without the ability to make commitments, the equilibrium policy begins with and maintains free trade.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 37
Date: 1993
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/51112/files/93-6.pdf (application/pdf)

Related works:
Journal Article: Phasing In and Phasing Out Protectionism with Costly Adjustment of Labour (1994)
Working Paper: Phasing in and Phasing Out Protectionism with Costly Adjustment of Labour (1993)
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:ags:iatrwp:51112

DOI: 10.22004/ag.econ.51112

Access Statistics for this paper

More papers in Working Papers from International Agricultural Trade Research Consortium Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search (aesearch@umn.edu).