Working Paper: CEPR ID: DP14175
Authors: Dani Rodrik; Rafael Di Tella
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.
Keywords: No keywords provided
JEL Codes: F16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| labor market shocks (J49) | preferences for government intervention (P35) |
| trade shocks (F14) | demand for protectionism (F52) |
| non-trade shocks (F19) | demand for protectionism (F52) |
| outsourcing to a developing country (O10) | demand for trade protection (F13) |
| bad management shock (M54) | demand for compensatory transfers (F16) |
| political ideology (P16) | demand for protectionism (F52) |
| highlighting labor abuses (J82) | demand for protection among Clinton supporters (F52) |
| highlighting labor abuses (J82) | demand for protection among Trump supporters (F52) |