Citation

Discussion Paper Details

Please find the details for DP13393 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: The economics and politics of revoking NAFTA

Author(s): Raphael Auer, Barthelemy Bonadio and Andrei A. Levchenko

Publication Date: December 2018

Keyword(s): Distributional Effects, NAFTA, protectionism, quantitative trade models and trade policy

Programme Area(s): International Trade and Regional Economics

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 2.26% in the United States. 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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13393

Bibliographic Reference

Auer, R, Bonadio, B and Levchenko, A. 2018. 'The economics and politics of revoking NAFTA'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13393