The impact of tariff liberalisation on Canadian employment, 1987-1996, an empirical investigation of selected manufacturing industries

by Hosein, Judy

This paper examines the impact of targff liberalisation on employment for selected Canadian manufacturing industries between 19874996. An input-output model was constructed to estimate the changes in the level of employment arising from changes in theflow of imports and exports due to tariff liberalisation. In addition to an input-output model, preliminary econometric testing was also conducted to capture the effects of other struc?ural and cyclical factors that may have also aected employment during the same period. In this regard, an OLS mode1 was constructed that examined the relationship between employment and the following variables: exchange rates, Canadian gross domestic product, US gross domestic product, and tariy rates. The main findhg of the study wus thut tariff liberalisation had a minimal impact on employment, but that the extent of the impact varied across industries. Moreover, the employment effects were found to be dependent on the specific production requirements of industries rather than trade sensilivity, as is commonly argued in the economic literature. A \vus also established that, Ni conjuction with tarilf liberalisation, other macro-economic factors also dected the level of employment during the same pe riod. I wish to acknowledge Professor Mario Seccareccia, my supervisor, for his valuable comments and insight in the preparation of this thesis. Special thanks also goes to Marilyn Hosein and Thomas Allgoewer for their unending support and words of encouragement.