The Effects of Foreign Trade on Real Wages: The Case of the United States and Canada

According to the United States Trade Representative, Canada is the United States’ largest export market with machinery (HS 2-digit code 84) being the Unites States largest export in 2015. The main purpose of this paper is to find a relationship between trade of the United States and Canada and real wages in the United States in the period of 2010.1 to 2016.12. According to the results, the method Karaalp et al (2016) uses is insignificant in the case of machinery exports to Canada and the United States real wages in manufacturing. The new model we develop shows that there is an insignificant relationship between machinery exports and real wages but shows strong long run relationship with industrial production index: Durable goods: Machinery and the Canadian and the United States exchange rate. We then discuss further research methods