Abstract
Abstract. In this paper, I use Canadian micro‐data on individual workers to investigate the effect on wages of the tariff reductions mandated by the Canada‐U.S. Free Trade Agreement (CUSFTA). The literature on industry wage premia has revealed that the industry of employment is an important determinant of a worker's wage. My findings indicate that relative wages fell in those industries that faced the deepest tariff cuts. This effect was experienced regardless of whether or not workers belonged to a union, suggesting that CUSFTA reduced the returns to industry‐specific human capital for those workers in the mostly heavily affected industries.
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