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

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Moynihan Institute of Global Affairs

Trade, Development and Political Economy


Peter Morrow

Associate Professor

University of Toronto Department of Economics

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

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. The authors 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 from industries facing import competition, with the majority of industry adjustment occurring among new entrants to the labor market.

Peter Morrow is an Associate Professor of Economics at the University of Toronto and the Co-Editor of the Canadian Journal of Economics. He currently teaches undergraduate and graduate courses in the Department of Economics at the University of Toronto and has previously taught at the Munk School of Global Affairs and Public Policy at the University of Toronto and has consulted for Global Affairs Canada. His work in the field of international trade has appeared in The Review of Economic Studies, The Journal of Development Economics, The Journal of International Economics, and the Canadian Journal of Economics. He has also served as the inaugural Data Editor for the Canadian Journal of Economics and has been a visiting professor at UC Berkeley. He received his Ph.D. in Economics from the University of Michigan and his undergraduate degrees in Economics and Latin from Boston College.

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