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ABSTRACT:
This paper analyzes the determinants of protectionism in a small open economy with search frictions a la PISSARIDES (2000). In equilibrium, jobs generate rents in each sector. Like in the Ricardo-Viner model, the magnitude of those rents may depend on the level of trade protection. The distinct feature of our model is that trade protection may also affect the access to those rents. By raising the domestic price of a given good, a government may attract more firms in a given industry. This raises the probability that a worker will find a job in this sector, and in turn, will benefit from the associated rents. Though simple, our model may help explain a variety of stylized facts regarding the structure of trade protection and individual trade-policy preferences.

SUGGESTED CITATION:
Arnaud Costenot, "Jobs, Jobs, Jobs: A New Perspective on Protectionism" (July 1, 2006). Department of Economics, UCSD. Paper 2006-05.
http://repositories.cdlib.org/ucsdecon/2006-05