Intra-Industry Trade Liberalization:

Why Skilled Workers in Most Countries

Resist Protectionism

Eugene Beaulieu*

Michael Benarroch**

and

James Gaisford***

august 2001

Abstract

This paper examines individual trade policy preferences across 24 countries with very different human capital endowments. We find that skilled workers in high-skilled and low-skilled countries alike are more likely than unskilled workers to oppose protection and by extension favor trade liberalization. This is contrary to the standard Stolper-Samuelson prediction that liberalization will be beneficial to skilled labor in relatively skill-abundant countries but harmful to skilled labor in relatively skill-scarce countries. The empirical results are explained by coupling intra-industry trade liberalization within a monopolistically competitive skill intensive sector and the removal of both tariffs and export subsidies within the labor-intensive sector. Provided that a country is diversified, skilled workers gain at the expense of unskilled workers from symmetric multilateral liberalization.

JEL Codes: F11, F12

* Eugene Beaulieu; Department of Economics, University of Calgary, 2500 University Drive N.W., Calgary, Alberta, Canada T2N 1N4. E-mail: beaulieu@ucalgary.ca.

** Michael Benarroch (Corresponding Author); Department of Economics, University of Winnipeg, 515 Portage Ave., Winnipeg, Manitoba, Canada R3B 2E9; E-Mail: m.benarroch@uwinnipeg.ca.

*** James Gaisford; Department of Economics, University of Calgary, 2500 University Drive N.W., Calgary, Alberta, Canada T2N 1N4. E-mail: gaisford@ucalgary.ca