Trade could impact political polarization


Kaveh Majlesi, affiliated to IFN, has studied trade vs. US elections.

Has expanding trade between the U.S. and China contributed to the polarization of U.S. politics? Analyzing outcomes from the 2002 and 2010 congressional elections, Kaveh Majlesi, Lund University and affiliated to IFN, along with David Autor, David Dorn and Gordon Hanson have detected an ideological realignment in trade-exposed local labor markets that commences prior to the 2016 U.S. presidential election.

How come that you started studying trade vs. election results?

“In the last decade or so we researchers started showing that import competition with China had negative economic outcomes across labor markets in the United States. Four years ago, I started to think about whether these negative economic shocks had political ramifications” said Kaveh Majlesi.

Kaveh Majlesi and his co-authors find strong evidence that congressional districts exposed to larger increases in import competition disproportionately removed moderate representatives from office in the 2000s. Trade-exposed districts initially in Republican hands become substantially more likely to elect a conservative Republican, while trade-exposed districts initially in Democratic hands become more likely to elect either a liberal Democrat or a conservative Republican.

Polarization is also evident when breaking down districts by race: trade-exposed areas with a majority white population are disproportionately likely to replace moderate legislators with conservative Republicans. On the other hand, locations with a majority non-white population tend to replace moderates with liberal Democrats.

Is there a lesson also for Sweden?

“Yes” Majlesi said, adding that follow-up studies have been done in a number of European countries, though not in Sweden. And the results are similar. “In a more general framework, we learn that when concentrated and severe economic chocks happen it is extremely important to beware of political consequences that might follow.”

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