With the growing concerns about increasing protectionism, several empirical studies have investigated the effects of protection. While these studies presented interesting and important findings, few of them have discussed their frameworks and results in a comprehensive manner. This paper reviews these recent studies. We first show that they mainly employ either quantitative trade models or difference-in-differences design to investigate protectionism. We then discuss the strengths and limitations of these approaches. Finally, we consider possible directions for future research.
Can trade liberalization deliver an employment double dividend and a welfare gain? To answer this question, we develop a trade model with firm heterogeneity, search and matching frictions, and an emissions tax. Decomposing the impact of trade liberalization on the amount of emissions into four forces, we first analytically show that trade liberalization may or may not support an employment double-dividend hypothesis, and that it may deliver a welfare loss. We then simulate our model and find that though it is rejected, a deliberate investment in abatement technology enables an economy to transit to a clean equilibrium with lower unemployment.
I analyze the effects of privatization and export tax in the renewable resource sector. I find that privatization increases the resource stock level, and I show conditions under which privatization is welfare improving. Further, I analyze the effect of export tax on the renewable resource stock level and welfare. In addition, I study the interaction between privatization and tax policy and find that the optimal export tax can be different based on different levels of privatization. I also show that privatization and export tax can have similar effects on the resource stock and the domestic welfare.
We construct a model to examine the impacts of an increase in the skilled labor input to public education on the output of final goods, environmental goods, and pollution emissions, in which skill formation is incorporated into the traditional Ricardo-Viner (RV) model. Due to the inclusion skill formation, one of the specific factors (skilled labor) and a mobile factor (unskilled labor) are endogenously determined, unlike in the traditional RV model. We then show that an increase in public education service may have negative effects on the output through changes in the wages of skilled and unskilled labor, as well as the rental rate of real capital, all due to the skill formation process. However, we also show the conditions that must be met in order for public education to promote environmental protection.