Political Consequences of Localized Trade Shocks in the United States

Session Submission Type: Full Paper Panel

Session Description

The recent surge in protectionism and the backlash against globalization in advanced economies constitute a puzzle for international political economy. Leveraging the China shock and Trade Adjustment Assistance (TAA) datasets, scholars have explored the political effects of localized trade competition, focusing on the electoral and attitudinal consequences of increasing imports. Yet our understanding of how foreign trade impacts other aspects of domestic politics remains limited.

This panel contributes to the burgeoning literature on the domestic politics of trade by examining the political implications of trade competition in the United States. What tools do political actors use to respond to trade shocks, and what are the political consequences of their actions? Why do some citizens oppose trade shocks more than others? Which political communication strategies do politicians utilize to respond to localized trade shocks in their districts? The papers in this panel advance new theories to answer these questions and provide important insights into the populist backlash against globalization sweeping advanced industrial democracies. Their investigation of how a variety of political actors (firms, legislators and individuals) respond to import competition adds to the literature on domestic reactions to international trade. The papers apply innovative statistical methods to novel datasets to improve our understanding of how democratic politics are structured in the era of globalization. Finally, they draw attention to important topics that the trade literature has thus far paid limited attention to – including behavioral responses to trade by individuals and legislators, strategic communication in response to trade by political actors, and the emergence of divergent beliefs over compensation of losers from trade.

The first set of papers by Pelc, Kim and Bisbee exploits the geographical variation in TAA claims in order to examine how politics differ in areas that are negatively affected by trade. Pelc and Kim use plant-level responses to import competition to argue that trade adjustment and protectionist measures like anti-dumping duties are used as substitutes in response to trade shocks. Aggregating these findings to the Congressional District level, they show that Democratic candidates benefit from reliance on TAA more than Republican candidates. At the voter level, Bisbee utilizes the TAA dataset as a geographically rich proxy for trade’s local consequences. Using geo-located public opinion survey data, he finds that proximity to visible losses from trade render individuals more intolerant to out-groups along the lines of race and ethnicity, complicating the debate between economic anxiety and racial resentment as the sources of Trump’s political support.

The second set of papers by Kuk, Zhang, Seligsohn and Katitas utilize data on Chinese import penetration (Autor, Dorn, Hanson; 2013) in order to shed light on political communication strategies in the era of economic globalization. The papers explore an overlooked dimension of trade politics – how the strategic behavior of politicians mitigates or exacerbates the political implications of trade competition. Kuk and coauthors investigate the strategic behavior of incumbent legislators in response to increased trade competition from China in their districts. Using natural language processing methods, the authors examine how import exposure and incumbent partisanship help explain the tone legislators take when communicating about free trade and China in congressional press releases. They find that, while the overall sentiment on trade doesn’t change, Republicans in districts that are hard-hit by Chinese imports talk more negatively about China. Finally, Katitas looks at a different facet of political communication strategy - political advertising. She first examines the strategic choice behind airing a trade-related advertisement in House elections between 2010 and 2014 as a function of candidate and constituency characteristics. She then demonstrates that negative advertising on trade in a district dampens constituency support for free trade.

These papers provide new perspectives on long-standing puzzles concerning the domestic consequences of free trade in the U.S. By investigating a range of topics, from public opinion to electoral outcomes, from strategic firm to legislator behavior, this panel provides a comprehensive picture of how economic globalization shapes and is shaped by domestic politics in the U.S.

Sub Unit

• DIVISION 16: International Political Economy

Individual Presentations

• The Politics of Trade Adjustment - Krzysztof J. Pelc, McGill University; Sung Eun Kim, Korea University

• How Trade Shocks Prompt Racism in the United States - James Hodgdon Bisbee, NYU

• The Partisan Divide in US Congressional Communications After the China Shock - Deborah Seligsohn, Villanova University; John Seungmin Kuk, Washington University in St. Louis; Jiakun Zhang, University of Kansas

• Making Trade Electorally Salient: Trade-Related Campaign Advertising in the U.S. - Aycan Katitas, University of Virginia

Chair

• Nita Rudra Georgetown University

Discussants

• Hye Young You New York University

• Megumi Naoi University of California, San Diego