Working Paper: NBER ID: w30713
Authors: Assaf Razin
Abstract: Which income group is pro-globalization or anti-globalization—the wealthy skilled-labor or the poor low-skilled labor? How globalization affect income-based attitudes towards globalization? The paper addresses these issues in the framework of a small open economy which trades in goods and financial securities with the rest of the world. Income-based political cleavages analyzed are grounded on trade-related and macro-related fundamentals, familiar from a standard open-economy model. They are: (i) The degree of trade border frictions, (ii) The degree of international finance frictions, (iii) The relative factor abundance that determines the capital intensity of the country’s exports; and, (iv) The domestic savings and productivity of domestic investment, which determines whether the country is a financial capital exporter or importer.
Keywords: No keywords provided
JEL Codes: F00; F1; F30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| globalization (F60) | income-based attitudes (P46) |
| wealthy skilled labor class (J24) | pro-globalization (F69) |
| poor low-skilled labor class (F66) | anti-globalization (F69) |
| trade border frictions (F55) | attitudes of different income groups (D31) |
| international finance frictions (F39) | attitudes of different income groups (D31) |
| globalization (F60) | distribution of income (D31) |
| globalization (F60) | generosity of the welfare state (I38) |
| higher trade globalization (F69) | reallocation of income (E25) |
| reallocation of income (E25) | benefits to capital owners (P12) |
| reallocation of income (E25) | decline in labor shares (E25) |