Labor Market Shocks and the Demand for Trade Protection: Evidence from Online Surveys / Rafael Di Tella, Dani Rodrik.

Format:

Book

Author/Creator:

Di Tella, Rafael.

Contributor:

National Bureau of Economic Research.

Rodrik, Dani.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25705.

NBER working paper series no. w25705

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Labor Market Shocks and the Demand for Trade Protection

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We study preferences for government action in response to layoffs resulting from different types of labor-market shocks. We consider the following shocks: technological change, a demand shift, bad management, and three kinds of international outsourcing. Respondents are given a choice among no government action, compensatory transfers, and trade protection. In response to these shocks, support for government intervention generally rises sharply and is heavily biased towards trade protection. Demand for import protection increases significantly in all cases, except for the "bad management" shock. Trade shocks generate more demand for protectionism, and among trade shocks, outsourcing to a developing country elicits greater demand for protectionism than outsourcing to a developed country. The "bad management" shock is the only scenario that induces a desired increase in compensatory transfers. Effects appear to be heterogeneous across subgroups with different political preferences and education. Trump supporters are more protectionist than Clinton supporters, but preferences seem easy to manipulate: Clinton supporters primed with trade shocks are as protectionist as baseline Trump voters. Highlighting labor abuses in the exporting country increases the demand for trade protection by Clinton supporters but not Trump supporters.

Notes:

Print version record

March 2019.