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Tariffs and Wages in Trade Theory

Review of Development Economics

Published online on

Abstract

The theory of production and trade is motivated in large part by the effects of tariffs on wages. General equilibrium models that examine these effects include constant costs, factor proportions, specific factors, imperfect competition and noncompetitive factor market. The present paper reviews the effects of tariffs on wages in small open economies across this broad range of trade theory. From this wide perspective, tariffs support wages only under narrow sets of assumptions. There should be no presumption that tariffs support wages.