Abstract
Expectation formation about future trade liberalization induces sectoral adjustment in advance and so the number of opposition decreases and trade liberalization can be self-fulfilling. We analyze this expectation formation mechanism in political process from two aspects: population aging and uncertainty. Then, we show that (i) the effect of population aging of workforce varies depending on a driving force of population aging and (ii) the effect of expectation formation is non-monotonic across ages and the largest in a middle-age cohort. Also, we analyze uncertainty about future trade liberalization. Then, we show that (iii) the mechanism cannot work due to strategic delay, but (iv) a subsidy scheme or political leadership can resolve this problem.
Published Version
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