The Effect of Trade on Workers and Voters

Christian Dippel, Robert Gold, Stephan Heblich and Rodrigo Pinto

The Economic Journal, 2022, vol. 132, issue 641, 199-217

Abstract: We investigate economic causes of the rising support of populist parties in industrialised countries. Looking at Germany, we find that exposure to imports from low-wage countries increases the support for nationalist parties between 1987–2009, while increasing exports have the opposite effect. The net effect translates into increasing support of the right-populist Alternative for Germany party after its emergence in 2013. Individual data from the German Socio-Economic Panel reveal that low-skilled manufacturing workers’ political preferences are most responsive to trade exposure. Using a novel approach to causal mediation analysis, we identify trade-induced labour market adjustments as an economic mechanism causing the voting response to international trade.

Date: 2022
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