Voting on a Trade Agreement: Firm Networks and Attitudes Toward Openness

Esteban Méndez and Diana Van Patten

No 30058, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We exploit a unique event to study the extent to which popular attitudes toward trade are driven by economic fundamentals. In 2007, Costa Rica put a free trade agreement (FTA) to a national referendum. With a single question on the ballot, 59% of Costa Rican adult citizens cast a vote on whether they wanted an FTA with the United States to be ratified or not. We merge disaggregated referendum results, which break new ground on anonymity-compatible voting data, with employer-employee, customs, and firm-to-firm transactions data, and data on household composition and expenditures. We document that a firm’s exposure to the FTA, directly and via input-output linkages, significantly influences the voting behavior of its employees. This effect dominates that of sector-level exposure and is greater for voters aligned with pro-FTA political candidates. We also show that citizens considered the expected decrease in consumer prices when exercising their vote. Overall, economic factors explain 7% of the variation in voting patterns, which cannot be accounted for by non-economic factors such as political ideology, and played a pivotal role in this vote.

JEL-codes: D72 F13 F14 F68 O24 (search for similar items in EconPapers)
Date: 2022-05
New Economics Papers: this item is included in nep-cdm, nep-int and nep-pol
Note: DEV IFM ITI POL
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