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What Determines Individual Trade Policy Preferences?

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  • Kenneth F. Scheve
  • Matthew J. Slaughter
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    Abstract

    This paper provides new evidence on the determinants of individual trade policy preferences using an individual-level data set identifying both stated trade policy preferences and potential trade exposure through several channels for the United States in 1992. There are two main empirical results. First, we find that factor type dominates industry of employment in explaining support for trade barriers. This result is consistent with a Heckscher-Ohlin model of the United States in which the country is well endowed with skilled labor relative to the rest of the world. The result suggests that there is high intersectoral labor mobility in the United States over the time horizons relevant to individuals when evaluating trade policy. Second, we find that home ownership also matters for individuals' trade policy preferences. Independent of factor type, home ownership in counties with a manufacturing mix concentrated in comparative disadvantage industries is strongly correlated with support for trade barriers. This finding suggests that in addition to current factor incomes driving preferences as in standard trade models, in reality preferences also depend on asset values. To the extent that trade policy is like other government policies which affect citizens by changing relative product prices, our findings have implications for how individuals form preferences over a wide range of economic policies.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6531.

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    Date of creation: Apr 1998
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    Publication status: published as Scheve, Kenneth F. and Matthew J. Slaughter. "What Determines Individual Trade-Policy Preferences?," Journal of International Economics, 2001, v54(2,Aug), 267-292.
    Handle: RePEc:nbr:nberwo:6531

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    1. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 86(5), pages 775-91, October.
    2. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec..
    3. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(1), pages 138-60, February.
    4. Case, Karl E. & Mayer, Christopher J., 1996. "Housing price dynamics within a metropolitan area," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 26(3-4), pages 387-407, June.
    5. Midford, Paul, 1993. "International trade and domestic politics: improving on Rogowski's model of political alignments," International Organization, Cambridge University Press, Cambridge University Press, vol. 47(04), pages 535-564, September.
    6. Rodrik, Dani, 1995. "Political economy of trade policy," Handbook of International Economics, Elsevier, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 28, pages 1457-1494 Elsevier.
    7. Robert C. Feenstra, 1996. "U.S. Imports, 1972-1994: Data and Concordances," NBER Working Papers 5515, National Bureau of Economic Research, Inc.
    8. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, American Economic Association, vol. 74(5), pages 970-85, December.
    9. Edward J. Balistreri, 1997. "The Performance of the Heckscher-Ohlin-Vanek Model in Predicting Endogenous Policy Forces at the Individual Level," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 30(1), pages 1-17, February.
    10. Findlay, Ronald, 1984. "Growth and development in trade models," Handbook of International Economics, Elsevier, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 4, pages 185-236 Elsevier.
    11. Frieden, Jeffry A., 1991. "Invested interests: the politics of national economic policies in a world of global finance," International Organization, Cambridge University Press, Cambridge University Press, vol. 45(04), pages 425-451, September.
    12. Hanson, Gordon H, 1997. "Increasing Returns, Trade and the Regional Structure of Wages," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(440), pages 113-33, January.
    13. Andrew Caplin & Sewin Chan & Charles Freeman & Joseph Tracy, 1997. "Housing Partnerships: A New Approach to a Market at a Crossroads," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262032430, December.
    14. Mayer, Wolfgang, 1974. "Short-Run and Long-Run Equilibrium for a Small Open Economy," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(5), pages 955-67, Sept./Oct.
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    Cited by:
    1. Tavares, Jose, 2003. "Trade, Factor Proportions and Political Rights," FEUNL Working Paper Series wp437, Universidade Nova de Lisboa, Faculdade de Economia.
    2. Jaime MELO DE & Jean Marie GRETHER & Jean Claude MULLER, 2000. "The Political Economy of International Migration in a Ricardo-Viner Model," Working Papers 200021, CERDI.
    3. Anna Maria Mayda (Georgetown University) and Dani Rodrik (Harvard University), 2005. "Why are some people (and countries) more protectionist than others?," Working Papers, Georgetown University, Department of Economics gueconwpa~05-05-11, Georgetown University, Department of Economics.
    4. Magee, Christopher S.P. & Davidson, Carl & Matusz, Steven J., 2005. "Trade, turnover, and tithing," Journal of International Economics, Elsevier, Elsevier, vol. 66(1), pages 157-176, May.
    5. Calmfors, Lars & Dimdins, Girts & Sendén, Marie Gustafsson & Montgomery, Henry & Stavlöt, Ulrika, 2013. "Why do people dislike low-wage trade competition with posted workers in the service sector?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 47(C), pages 82-93.
    6. Dutt, Pushan & Mitra, Devashish, 2002. "Endogenous trade policy through majority voting: an empirical investigation," Journal of International Economics, Elsevier, Elsevier, vol. 58(1), pages 107-133, October.
    7. José Anson & Olivier Cadot, 2004. "Par-delà le "Röstigraben": l'électorat suisse partagé face à l'UE," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), Swiss Society of Economics and Statistics (SSES), vol. 140(II), pages 171-206, June.
    8. Lars Calmfors & Girts Dimdins & Marie Gustafsson Sendén & Henry Montgomery & Ulrika Stavlöt, 2012. "Why Do People Dislike Low-Wage Trade Competition with Posted Workers in the Service Sector?," CESifo Working Paper Series 3842, CESifo Group Munich.
    9. Kenneth F. Scheve & Matthew J. Slaughter, 1999. "Labor-Market Competition and Individual Preferences Over Immigration Policy," NBER Working Papers 6946, National Bureau of Economic Research, Inc.

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