Labour Market Shocks and the Demand for Trade Protection: Evidence from Online Surveys

50 Pages Posted: 17 Dec 2019

See all articles by Rafael Di Tella

Rafael Di Tella

Harvard Business School - Business, Government and the International Economy Unit; National Bureau of Economic Research (NBER)

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS)

Date Written: December 2019

Abstract

We study preferences for government action in response to layoffs resulting from different types of labour-market shocks. We consider: technological change, a demand shift, bad management, and three kinds of international outsourcing. Support for government intervention rises sharply in response to shocks and is heavily biased towards trade protection. Trade shocks generate more demand for protectionism, and among trade shocks, outsourcing to a developing country elicits greater demand for protectionism. The 'bad management' shock is the only scenario that induces a desired increase in compensatory transfers. Trump supporters are more protectionist than Clinton supporters, but preferences seem easy to manipulate: Clinton supporters primed with trade shocks are as protectionist as baseline Trump voters. Highlighting labour abuses in the exporting country increases the demand for trade protection by Clinton supporters but not Trump supporters.

Suggested Citation

Di Tella, Rafael and Rodrik, Dani, Labour Market Shocks and the Demand for Trade Protection: Evidence from Online Surveys (December 2019). CEPR Discussion Paper No. DP14175, Available at SSRN: https://ssrn.com/abstract=3504604

Rafael Di Tella (Contact Author)

Harvard Business School - Business, Government and the International Economy Unit ( email )

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617-496-5985 (Fax)

HOME PAGE: http://www.people.hbs.edu/rditella/

National Bureau of Economic Research (NBER)

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Dani Rodrik

Harvard University - Harvard Kennedy School (HKS) ( email )

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Cambridge, MA 02138
United States

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