Innovation Seminar Series

Re-Thinking the Domestic Effects of Trade Liberalization: the Environment and Wage Inequality

Presented by Dr. James Gaisford, Dean, Faculty of Arts, Thomson Rivers University


In standard models that focus on inter-industry trade, the liberalization of trade accentuates the differences between countries by inducing greater specialization according to comparative advantage creating a tendency for both emissions and wage inequality to move in opposite directions across countries. Meanwhile, in reality intra-industry trade has become increasingly important while there have been challenges to liberalize trade in some key some sectors such as agriculture and services. With intra-industry trade liberalization or both intra-industry and inter-industry trade liberalization, the standard results are typically reversed. For better or worse, emissions and wage inequality tend to move in the same direction in all countries.