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Tariffs and the Composition of Employment: Evidence from the Canada–US Free Trade Agreement

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  • Jeff Chan

Abstract

I analyze the effect of the Canada–US Free Trade Agreement (CUSFTA) on the composition of employment at the local labour market level in Canada. I construct local labour-market-level changes in tariffs for both exports and imports, exploiting regional differences in pre-CUSFTA industrial composition to obtain variation in the degree to which CUSFTA affected localities across Canada. I find that Census Divisions (CDs) that experienced larger Canadian tariff cuts against US imports experienced higher rates of self-employment. CDs with larger American tariff cuts against Canadian goods correspondingly experienced lower rates of self-employment. These self-employment effects are dampened in CDs with higher initial shares of educated people, immigrants, and female workers. I do not find any evidence that part-time employment is affected by CUSFTA tariff cuts. The findings in this article provide evidence that increasing trade openness between two developed countries can affect the prevalence of self-employment.

Suggested Citation

  • Jeff Chan, 2019. "Tariffs and the Composition of Employment: Evidence from the Canada–US Free Trade Agreement," Canadian Public Policy, University of Toronto Press, vol. 45(3), pages 342-365, September.
    • Handle: RePEc:cpp:issued:v:45:y:2019:i:3:p:342-365
    DOI: 10.3138/cpp.2018-080
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    Cited by:

    1. Louis-Philippe Beland & Oluwatobi Fakorede & Derek Mikola, 2020. "Short-Term Effect of COVID-19 on Self-Employed Workers in Canada," Canadian Public Policy, University of Toronto Press, vol. 46(S1), pages 66-81, July.

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