Globalization, Government Popularity, and the Great Skill Divide
64 Pages Posted: 18 Jan 2018 Last revised: 23 Sep 2018
Date Written: September 12, 2018
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 respective differences in the response of political preferences to trade shocks. Using a unique data set including 105 countries and nearly 450,000 individuals, we find that growth in high skill-intensive exports (of goods and services) increases approval of the incumbent government among skilled individuals relative to approval among unskilled ones. The growth in high skill-intensive imports has the opposite effect. To identify exogenous variation in international trade, we exploit the timevarying effects of air and sea distances in 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.
Keywords: International trade; political approval; political polarization; skill intensity of trade
JEL Classification: D72; F14; G02; P16
Suggested Citation: Suggested Citation