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Instrumental Variables and Causal Mechanisms: Unpacking the Effect of Trade on Workers and Voters

Christian Dippel, Robert Gold (), Stephan Heblich () and Rodrigo Pinto

No 6816, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper shows that import exposure affects voting behavior because it affects local labor markets. We develop a new framework for mediation analysis where one instrumental variable is sufficient to identify three causal effects. Using German data from 1987–2009, we find that import exposure increases the support of nationalist parties and causes labor market turmoil. The voting response to import exposure can entirely be explained by the labor market adjustments to import exposure. Individual-level data corroborate our findings. Our novel estimation framework is applicable to a broad range of empirical studies interested in the causal mechanisms behind causal effects.

Keywords: instrumental variables; causal mediation analysis; import exposure; voting; local labor markets (search for similar items in EconPapers)
JEL-codes: C36 D72 F60 J20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-int
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

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Working Paper: Instrumental Variables and Causal Mechanisms: Unpacking The Effect of Trade on Workers and Voters (2017) Downloads
Working Paper: Instrumental Variables and Causal Mechanisms: Unpacking the Effect of Trade on Workers and Voters (2017) Downloads
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