When Do Employees Align with Their Companies?

• In Event: Firm-Level Politics of Trade

Abstract

What determines individual preferences for trade liberalization? Recent studies have found that firm-level characteristics may shape employee trade preferences. Employees of productive and globalized firms that benefit from trade are more likely to support trade liberalization compared to their counterparts from less productive and domestic firms as they can benefit economically from firm success through profit-sharing in the form of increased wages. However, because employees select into companies, there remains a concern that the observed effect of firms on individual trade opinion is driven entirely by unobserved individual characteristics. That is, productive employees may be more likely to work for globalized, productive companies and receive higher wages. In this paper, to address this concern I conduct a survey experiment on a Korean sample of 1500 company-employed individuals and show that firm characteristics do causally shape individual trade preferences through profit-sharing. Furthermore, I make a novel argument that less-productive firms may be more successful at mobilizing employees in support of their preferred policies. Individuals find losses more displeasing than they find similar gains attractive and such sense of loss aversion leads individuals to take greater risks to avoid losses from trade liberalization than to achieve gains.

Author

• Haillie Na-Kyung Lee, Seoul National University