Envy, Altruism, and the International Distribution of Trade Protection

47 Pages Posted: 1 Feb 2010 Last revised: 26 Feb 2010

See all articles by Xiaobo Lü

Xiaobo Lü

University of Texas at Austin

Kenneth Scheve

Stanford University

Matthew J. Slaughter

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2010

Abstract

One important puzzle in international political economy is why lower-earning and less-skilled intensive industries tend to receive relatively high levels of trade protection. This pattern of protection holds even in low-income countries in which less-skilled labor is likely to be the relatively abundant factor of production and therefore would be expected in many standard political-economy frameworks to receive relatively low, not high, levels of protection. We propose and model one possible explanation: that individual aversion to inequality--both envy and altruism--lead to systematic differences in support for trade protection across industries, with sectors employing lower-earning workers more intensively being relatively preferred recipients for trade protection. We conduct original survey experiments in China and the United States and provide strong evidence that individual policy opinions about sector-specific trade protection depend on the earnings of workers in the sector. We also present structural estimates of the influence of envy and altruism on sector-specific trade policy preferences. Our estimates indicate that both envy and altruism influence support for trade protection in the United States and that altruism influences policy opinions in China.

Suggested Citation

Lü, Xiaobo and Scheve, Kenneth F. and Slaughter, Matthew J., Envy, Altruism, and the International Distribution of Trade Protection (January 2010). NBER Working Paper No. w15700. Available at SSRN: https://ssrn.com/abstract=1544750

Xiaobo Lü (Contact Author)

University of Texas at Austin ( email )

Department of Government
Mail Stop: A1800
Austin, TX 78712
United States

HOME PAGE: http://www.xiaobolu.com

Kenneth F. Scheve

Stanford University ( email )

Stanford, CA 94305
United States

Matthew J. Slaughter

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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