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Local Economic and Political Effects of Trade Deals: Evidence from NAFTA

Author

Listed:
  • Jiwon Choi
  • Ilyana Kuziemko
  • Ebonya Washington
  • Gavin Wright

Abstract

Why have white, less-educated voters left the Democratic Party? We highlight the role of the 1994 North American Free Trade Agreement (NAFTA). In event-study analysis, we demonstrate that counties whose 1990 employment depended on industries vulnerable to NAFTA suffered large and persistent employment losses after its implementation. Voters in these counties (and protectionist voters regardless of geography) turned away from the party of President Clinton, who promoted the agreement. This shift is larger for whites (especially men and those without a college degree) and social conservatives, suggesting that racial identity and social-issue positions mediate reactions to economic policies.

Suggested Citation

  • Jiwon Choi & Ilyana Kuziemko & Ebonya Washington & Gavin Wright, 2024. "Local Economic and Political Effects of Trade Deals: Evidence from NAFTA," American Economic Review, American Economic Association, vol. 114(6), pages 1540-1575, June.
    • Handle: RePEc:aea:aecrev:v:114:y:2024:i:6:p:1540-75
    DOI: 10.1257/aer.20220425
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    Cited by:

    1. Suzanne Mettler & Trevor Brown, 2022. "The Growing Rural-Urban Political Divide and Democratic Vulnerability," The ANNALS of the American Academy of Political and Social Science, , vol. 699(1), pages 130-142, January.
    2. David Autor & David Dorn & Gordon Hanson & Maggie R. Jones & Bradley Setzler, 2024. "Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization," Working Papers 24-78, Center for Economic Studies, U.S. Census Bureau.
    3. Noghanibehambari, Hamid, 2025. "Revealed comparative disadvantage of infants: Exposure to NAFTA and birth outcomes," Journal of International Economics, Elsevier, vol. 155(C).
    4. Dorn, David & Levell, Peter, 2021. "Trade and Inequality in Europe and the US," CEPR Discussion Papers 16780, C.E.P.R. Discussion Papers.
    5. Alexeev, Michael V. & Pyle, William & Wang, Jiaan, 2025. "Russian society, democratic values, and the legacy of the early-1990s economic shock," BOFIT Discussion Papers 9/2025, Bank of Finland Institute for Emerging Economies (BOFIT).
    6. Natkhov, Timur & Pyle, William, 2023. "Revealed in transition: The political effect of planning's legacy," European Economic Review, Elsevier, vol. 159(C).
    7. Andrew Greenland & James Lake & John Lopresti, 2025. "The GATT vs Inflation: Tokyo Drift," NBER Working Papers 34429, National Bureau of Economic Research, Inc.
    8. Ver'onica Backer-Peral & Vitaly Meursault & Christopher Severen, 2025. "Can LLMs Credibly Transform the Creation of Panel Data from Diverse Historical Tables?," Papers 2505.11599, arXiv.org.
    9. Fetzer, Thiemo & Edenhofer, Jacob & Garg, Prashant, 2025. "Local decline and populism," Economics Letters, Elsevier, vol. 252(C).
    10. Natkhov, Timur & Pyle, William, 2022. "Revealed in transition : The political effect of planning’s legacy," BOFIT Discussion Papers 12/2022, Bank of Finland, Institute for Economies in Transition.
    11. Robert A. Blecker, 2025. "Conflict and cooperation in international trade: post-Keynesian perspectives," FMM Working Paper 119-2025, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    12. Morakinyo O. Adetutu, 2025. "The political economy of environmental legislation: evidence from the British Parliament," Public Choice, Springer, vol. 203(1), pages 205-235, April.
    13. Brey, Björn, 2024. "The effect of recent technological change on US immigration policy," Journal of Economic Behavior & Organization, Elsevier, vol. 227(C).
    14. Dorn, David & Levell, Peter, 2024. "Labour market impacts of the China shock: Why the tide of Globalisation did not lift all boats," Labour Economics, Elsevier, vol. 91(C).
    15. Blanchard, Emily J. & Bown, Chad P. & Chor, Davin, 2024. "Did Trump’s trade war impact the 2018 election?," Journal of International Economics, Elsevier, vol. 148(C).
    16. Alberto Alesina & Marco Tabellini, 2024. "The Political Effects of Immigration: Culture or Economics?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 5-46, March.
    17. Ilyana Kuziemko & Nicolas Longuet-Marx & Suresh Naidu, 2024. "“Compensate the Losers?†Economic Policy and Partisan Realignment in the US," Working Papers 321, Princeton University, Department of Economics, Center for Economic Policy Studies..
    18. Gordon H. Hanson & Enrico Moretti, 2025. "Where Have All the Good Jobs Gone? Changes in the Geography of Work in the US, 1980-2021," NBER Working Papers 33631, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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