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Globalization, Government Popularity, and the Great Skill Divide

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  • Aksoy, Cevat Giray
  • Guriev, Sergei
  • Treisman, Daniel

Abstract

How does international trade affect the popularity of governments and leaders? We provide the first large-scale, systematic evidence that the divide between skilled and unskilled workers worldwide is producing corresponding differences in the response of political preferences to trade shocks. Using a unique data set including 118 countries and nearly 450,000 individuals, we find that growth in high skill intensive exports (of goods and services) increases approval of the leader and incumbent government among skilled individuals. Growth in high skill intensive imports has the opposite effect. High skill intensive trade has no such effect among the unskilled. To identify exogenous variation in international trade, we exploit the time-varying effects of air and sea distances on bilateral trade flows. Our findings suggest that the political effects of international trade differ with skill intensity and that skilled individuals respond differently from their unskilled counterparts to trade shocks.

Suggested Citation

  • Aksoy, Cevat Giray & Guriev, Sergei & Treisman, Daniel, 2018. "Globalization, Government Popularity, and the Great Skill Divide," CEPR Discussion Papers 12897, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12897
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    References listed on IDEAS

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    1. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 309-400.
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    Cited by:

    1. Aksoy, Cevat Giray & Eichengreen, Barry & Saka, Orkun, 2020. "The political scar of epidemics," BOFIT Discussion Papers 14/2020, Bank of Finland, Institute for Economies in Transition.
    2. Thiemo Fetzer, 2018. "Did Austerity Cause Brexit?," CESifo Working Paper Series 7159, CESifo.
    3. Fetzer, Thiemo, 2018. "Did Austerity Cause Brexit?," CAGE Online Working Paper Series 381, Competitive Advantage in the Global Economy (CAGE).

    More about this item

    Keywords

    International Trade; political approval; Political Polarization; skill intensity of trade;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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