Full Citation
Title: The Regional and Sectoral Consequences of Leaving NAFTA
Citation Type: Miscellaneous
Publication Year: 2018
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Abstract: The Trump administration is renegotiating NAFTA, the free trade agreement between the United States, Mexico, and Canada. Little research has quantified the potential effects of such a renegotiation. To evaluate these effects, we use a dynamic trade model adapted from Caliendo, Dvorkin, and Parro. The model, which considers both input-output linkages and migration/trade frictions, can estimate how leaving NAFTA will change employment and welfare across 23 sectors and 87 regions. We find that leaving NAFTA decreases aggregate U.S. welfare by 0.03%, while decreasing aggregate Mexican and Canadian welfare by 0.15%. U.S. non-employment increases by 0.09%, or 45,000 people. For particular U.S. industries, the shock of leaving NAFTA can be large: employment in textiles rises by 0.49%, and employment in transportation equipment manufacturing falls by 0.25%. Trade between NAFTA countries is significantly affected: trade from Canada and Mexico to the U.S. falls by 14%, while trade in the opposite direction falls by 7%.
User Submitted?: No
Authors: Huang, Kevin
Publisher: Yale University
Data Collections: IPUMS CPS
Topics: Labor Force and Occupational Structure, Population Data Science
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