An empirical analysis of trade-related redistribution and the political viability of free trade

Lake, James; Millimet, Daniel L.

doi:10.1016/j.jinteco.2016.01.001

Cited by 16 publications

(10 citation statements)

References 45 publications

(49 reference statements)

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“…They find a robust effect of import competition on voter polarization and on demand for trade policy restrictions and economic assistance programs. These effects are in line with findings from the early literature of the political economy of reforms (Greskovits, 1993), as well as with evidence that voter support for free trade is a function of expected adjustment assistance (Lake and Millimet, 2016). Similarly to the conclusions for the USA, Dippel et al (2015) find sufficient causal evidence of trade-induced shifts in voter preferences for the far-right parties in Germany, and Caselli et al (2019) conduct a similar exercise for Italy.…”

Section: Economysupporting

confidence: 89%

The Political Economy of Populism

Stankov¹

2020

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Populism is the big topic in political science now. The study of the latest re-emergence of populist parties and leaders has managed to attract some of the most talented young scholars. In this rigorously researched book Petar Stankov offers an original theory of populist cycles, focusing on identity, economy and societal fairness. In addition, he offers empirical explanations of those cycles and valuable insights into the consequences of populist governance."

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Section: Economysupporting

confidence: 89%

The Political Economy of Populism

Stankov¹

2020

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“…Further consistent with the idea of inherent government preferences for protection is the recent empirical work of Conconi et al (2014) who find compelling evidence that electoral moti-vations underpin protectionist preferences of politicians. Additionally, Lake and Millimet (2016) find that, empirically, trade-related redistribution towards a politician's constituents can mitigate this inherent protectionist tendency. Thus, our alternative perspective squares with recent empirical evidence and popular concerns over trade policy.…”

Section: Anti-trade Head Startmentioning

confidence: 88%

“…Nevertheless, Conconi et al (2014) present compelling empirical evidence that governments, and politicians, have inherent protectionist motives related to re-election motives. Further, Lake and Millimet (2016) show how the PTA voting behavior of US House Representatives become less protectionist as their constituents receive more trade related redistribution, especially when the representative faces non-trivial re-election risk.…”

Section: Introductionmentioning

confidence: 98%

Contesting an international trade agreement

Cole

Lake

Zissimos

2021

Journal of International Economics

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After governments sign an international trade agreement (TA), each government must ratify the TA. Often, this ratification process is lengthy and the outcome highly uncertain. We model a two-country TA where, unlike prior literature, pro-trade and antitrade interest groups in each country recognize that (i) TA implementation requires ratification by both governments and (ii) they cannot condition contributions on their government's ratification decision. In this new class of contests, which we call 'parallel contests', we show that (i) anti-and pro-trade lobbies lobby in equilibrium, (ii) the probability of TA ratification lends itself to intuitive and tractable comparative statics, and (iii) the protection embodied in negotiated TA tariffs reflects a tension between the liberalizing force of lobbying and inherently protectionist government preferences.

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“…Several recent studies argue that since reallocation is costly and slow, subsidies to offset moving costs are one of the most effective ways to compensate workers adversely affected by trade. One such study finds that giving a full moving subsidy (one that covers 100% of the mobility costs) can almost completely compensate for the displaced worker's aggregate losses [11].…”

Section: Direct Subsidiesmentioning

confidence: 99%

Effects of regulating international trade on firms and workers

Robertson¹

2018

izawol

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While trade increases national welfare, its liberalization can impose significant and concentrated costs on workers. These costs are often born disproportionately by certain segments of society, which has created a groundswell of anti-globalization in many countries, as evidenced by the UK's exit from the EU (Brexit) and the US withdrawing from or renegotiating key free trade agreements. Reducing adjustment costs would be a more effective policy to boost employment than trying to restrict trade. In developing countries, however, carefully managed trade regulation can play a key role in supporting firms and workers in ways that contribute to economic growth. ELEVATOR PITCH Economists have shown that international trade increases economic growth, with trade liberalization and integration having characterized the last 50 years. While trade can increase national welfare, recent estimates from both developed and developing countries show that labor market adjustment costs matter. Regulating trade, defined as adding or removing tariffs and other trade barriers, is not the best way to help lower-income workers who suffer from trade-induced losses. Policies that reduce adjustment costs may increase aggregate welfare more than regulating trade flows does. KEY FINDINGS Cons Trade liberalization leads to reallocation of workers and resources across sectors and therefore imposes significant adjustment costs on workers. Even if trade liberalization increases national welfare, the costs can be highly concentrated geographically. Regulating international trade to recover lost jobs may not be effective because mobility costs are significant. Failure to address concentrated losses can undermine popular support for trade. Pros Trade increases national welfare by lowering prices for consumers, adding product variety, and contributing to economic growth. If part of a selective and proactive industrial policy, regulating international trade can help developing countries support exporting firms and workers. Reducing adjustment costs can increase the welfare gains from trade in both developed and developing countries.

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An empirical analysis of trade-related redistribution and the political viability of free trade

Cited by 16 publications

References 45 publications

The Political Economy of Populism

The Political Economy of Populism

Contesting an international trade agreement

Effects of regulating international trade on firms and workers

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