Equity concern and the political economy of protection in New Zealand

A number of empirical models have found protection to be greatest for industries employing poorly skilled, low paid workers. This has caused some economists, notably Robert Baldwin, to suggest that equity concern by politicians in an alternative to the interest group hypothesis. This paper reports the result of a test on New Zealand data that shows that this equity concern is absent for industries with few employees or firms. Equity concern variables were only important for industries with many employees and firms. This suggests that equity concern is selective and may be reconcilable with self-interest motivations.I am grateful to John Tressler, Richard Harris and an anonymous referee for their helpful comments.