Working Paper: NBER ID: w27630
Authors: Alessandro Barattieri; Matteo Cacciatore
Abstract: Using monthly data on temporary trade barriers (TTBs), we estimate the dynamic employment effects of protectionism through vertical production linkages. First, exploiting procedural details of TTBs and high-frequency data, we identify movements in protectionism exogenous to economic fundamentals. We then use input-output tables to construct measures of protectionism affecting downstream producers. Finally, we estimate panel local projections using the identified trade-policy shocks. Protectionism has small and insignificant beneficial effects in protected industries. In contrast, the effects in downstream industries are negative, sizable, and significant. The employment decline follows an increase in intermediate-inputs and final goods prices.
Keywords: protectionism; temporary trade barriers; employment effects; production networks
JEL Codes: F13; F14; F62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Protectionism (F52) | Employment in protected industries (J68) |
| Increase in TTBs (H29) | Employment in protected industries (J68) |
| Protectionism (F52) | Employment in downstream industries (L69) |
| Increase in TTBs in upstream industries (L69) | Employment in downstream industries (L69) |
| Price increases (E30) | Employment in downstream industries (L69) |
| Protectionism (F52) | Price increases (E30) |