Protection, Real Wages, and the Neoclassical Ambiguity with Interindustry Flows
Journal of Political Economy
1980
The strong relationship between commodity price changes and factor price changes that characterizes the standard Ricardo-Viner model does not extend to a model which includes interindustry flows. A change in relative commodity prices, induced, for example, by a tariff, may have an unambiguous effect on real wages--an effect that is free from index-number considerations involving labor's preferences. Labor may gain or lose more than any other group in the economy. Capital owners in the protected industry may be hurt by protection, or capital owners in the unprotected industry may benefit from protection. Employment may be shifted from the protected to the unprotected industry.
- DOI
- 10.1086/260902
- Volume
- 88 (4)
- Pages
- 783-802
- Language
- en
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- BibTeX
- Sources
- openalex crossref