Working Paper: CEPR ID: DP2595
Authors: Andr Sapir
Abstract: The paper examines why ?globaphobia? seems to be more prevalent among labour in the United States than in Europe. It argues that globalization has generated more wealth, but also more income inequality and adjustment problems, in America than in Europe. In the United States, the median voter has lost wages and experienced rising job insecurity due to globalization. By contrast, in Europe, the welfare state has largely insulated the median voter from the pains of globalization. The paper also examines international labour mobility, the grand absentee of the current wave of globalization. Here it finds that phobia runs higher in Europe than in America. It claims that the relative generosity of Europe?s welfare state makes it less open to migration than the United States.
Keywords: International migration; Labour adjustment; Trade liberalization
JEL Codes: F02; F13; F22; J60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Globalization (F60) | Increased income inequality (D31) |
| Globalization (F60) | Adjustment problems in the U.S. labor market (F66) |
| Welfare state in Europe (P16) | Insulation from globalization effects (F69) |
| Generosity of welfare state in Europe (I38) | Less openness to migration (F22) |
| Generous welfare states (H53) | Higher unemployment rates among non-EU foreigners (J69) |