Trade Policy as an Exogenous Shock: Focusing on the Specifics
This paper introduces a novel approach to quantifying the effects of tariff protection on economic outcomes by leveraging heterogeneous dependence on specific tariffs in the presence of price changes. We construct a database encompassing the universe of tariff lines across five US trade policy regimes between 1900 and 1940 and show that our measure of changes in “realized protection” strongly predicts import growth and labor market outcomes during this period. Using linked full-count Census data, we show that import exposure inhibited structural change by slowing the transition out of agriculture and into the expanding manufacturing sector, particularly among the young.
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