IDEAS home Printed from https://ideas.repec.org/a/bpj/buspol/v9y2007i1n2.html
   My bibliography  Save this article

Who Rides the Storm? Political Institutions and Trade Adjustment

Author

Listed:
  • Kono Daniel Y

    (University of California, Davis)

  • Love Greg

    (University of California, Davis)

Abstract

Both policymakers and scholars have expressed concern that trade has increased inequality in advanced industrialized countries (AICs). We argue that the impact of trade on inequality depends on the availability of public goods, such as educational opportunities, that allow displaced workers to upgrade their skills and adjust to trade. The provision of public goods, in turn, depends on political institutions: institutions that unify budgetary powers promote public-good spending while institutions that separate budgetary powers discourage it. Trade should thus increase inequality more (reduce inequality less) in countries with a high separation of budgetary powers. We test and find support for these hypotheses with a cross-sectional time-series analysis of fourteen AICs. Our results imply that trade can improve aggregate welfare without worsening economic inequities, but only if governments adopt complementary policies that facilitate human capital formation and labor-market adjustment.

Suggested Citation

  • Kono Daniel Y & Love Greg, 2007. "Who Rides the Storm? Political Institutions and Trade Adjustment," Business and Politics, De Gruyter, vol. 9(1), pages 1-28, May.
  • Handle: RePEc:bpj:buspol:v:9:y:2007:i:1:n:2
    as

    Download full text from publisher

    File URL: https://www.degruyter.com/view/j/bap.2007.9.1/bap.2007.9.1.1168/bap.2007.9.1.1168.xml?format=INT
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:buspol:v:9:y:2007:i:1:n:2. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: https://www.degruyter.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.