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The Political Economy of Trade and Migration: Evidence from the U.S. Congress
Abstract
Over the last decades, the United States has become increasingly integrated in the world economy. Very low trade barriers and comparatively liberal migration policies have made these developments possible. What drove US congressmen to support the recent wave of globalization? While much of the literature has emphasized the differences that exist between the political economy of trade and migration, in this paper we find that important similarities should not be overlooked. In particular, our analysis of congressional voting between 1970 and 2006 suggests that economic drivers that work through the labor market play an important role in shaping representatives behavior on both types of policies. Representatives from more skilled-labor abundant districts are more likely to support both trade liberalization and a more open stance vis-à-vis unskilled immigration. Still, important systematic differences exist: welfare state considerations and network effects have an impact on the support for immigration liberalization, but not for trade; Democratic lawmakers are systematically more likely to support a more open migration stance than their Republican counterparts, and the opposite is true for trade liberalization.
... Here, the role of traderelated redistribution has been ignored or overshadowed. For example, although not a main point of the paper, Conconi et al. (2012a) argue that factors affecting the size of public transfers received by a CD (e.g., median family income) or levels of state-level redistribution (e.g., public spending on welfare, health, and education) have not driven US trade policy. ...
... They find that the trade policy voting behavior of US Senators is more protectionist during the last 2-year cycle of their mandate, unless they face zero or very low re-election risk as a result of already announcing their retirement or being entrenched in a "safe seat". Conconi et al. (2012aConconi et al. ( , 2012b investigate the role of local economic gains. By examining votes since 1974 on fast track authority and all major trade-related bills, respectively, they find that voting behavior depends positively on a district's potential gains from trade (proxied by, respectively, employment in export sectors divided by employment in import sectors within the district relative to the US as a whole or the share of residents with at least a Bachelor's degree). ...
... where λ br are FTA-by-region FEs and α i are representative FEs. 17 Representative FEs are included in the model to control for time invariant unobserved heterogeneity that affects voting behavior and may be correlated with the political or economic climate of a representative's CD ( Conconi et al. (2012a)). We use FTA FEs to help control for factors affecting the economic impact of forming an FTA with a specific partner or partners (for example, the partner's economic size). ...
Even if free trade creates net welfare gains for a country as a whole, the associated distributional implications can undermine the political viability of free trade. We show that trade-related redistribution – as presently constituted – modestly increases the political viability of free trade in the US. We do so by assessing the causal effect of expected redistribution associated with the US Trade Adjustment Assistance program on US Congressional voting behavior on eleven Free Trade Agreements (FTAs) between 2003 and 2011. We find that a one standard deviation increase in expected redistribution leads to an average increase in the probability of voting in favor of an FTA of 1.8 percentage points. Although this is a modest impact on average, we find significant heterogeneities; in particular, the effect is larger when a representative's constituents are more at risk or the representative faces greater re-election risk.
... The literature on the distributional implications of globalization emphasizes that in advanced economies, exporting capital-intensive goods, low-skilled workers are "unambiguously worse off" as a result of trade liberalization (Rodrik, 2018; see also, e.g., Conconi et al., 2018). In contrast, studying the distributive implications of technological innovation, Autor et al. (2003) established that computers are particularly powerful in replacing routine jobs characterized by tasks that follow explicit, clearly defined rules. ...
Automation, digitalization and smart software fundamentally reshape the employment structure of post-industrial societies. The share of routine jobs is constantly shrinking while non-routine jobs at both ends of the skill distribution tend to grow. We contend that the existing political science literature has not sufficiently connected the distributive implications of technological change with contemporary political disruptions. The fact that disadvantages are strongly concentrated among blue- and white-collar routine workers in the lower middle class is of crucial importance. Routine workers are a large and electorally relevant group with all the necessary means for political participation. Increasingly bleak prospects in the labor markets of tomorrow create a demand for social, cultural, and economic protectionism. Socially conservative parties in general and right-wing populist parties in particular have recognized the electoral potential of disaffected routine workers and skillfully address and acknowledge their anxieties. We conclude that a lower middle class no longer protected from the vagaries of economic modernization is a potential electoral game changer.
... Wong (1995) describes the different meanings of substitutability and complementarity. Throughout this paper, we use these terms in a volume-of-trade sense. 2 See Conconi et al. (2012) for a recent empirical analysis of the politics of trade and migration. Facchini (2004) surveys the theory on the political economy of trade and factor mobility. 3 The model is a simplified version of the probabilistic voting model described in Perrson and Tabellini (2000). ...
This paper uses a probabilistic voting model to investigate voting for a free-trade agreement between a labor-abundant country and a capital-abundant country. Migration from the labor-abundant country to the capital-abundant country increases the probability of a free-trade agreement, with lower migration costs leading to more migration and a higher free-trade probability. On the other hand, if a lower probability of free trade is caused by an increased voter bias against free-trade candidates, then there is less migration. A dynamic extension of the model is also investigated.
... Much of the research on legislator voting behavior originates from political science, where the main focus lies in finding a link between ideological variables and roll-call voting choices ( Becher et al., 2016;Cox and Poole, 2002;Fleisher, 1993;Poole and Rosenthal, 2001;Snyder and Groseclose, 2000). More recently, economists have also begun exploring legislative voting behavior towards the purpose of understanding what drives policy reforms (Facchini and Steinhardt, 2011;Conconi et al., 2012;Bouton et al., 2014;Halcoussis and Lowenberg, 2015;Facchini et al., 2016). These studies, however, explore legislator behavior at the federal level, that is, roll-call voting in the US Congress. ...
This paper investigates how upward mobility affects legislator voting behavior towards education policies. We develop an electoral competition model where voters are altruistic parents and politicians are office seeking. In this setting the future economic status of the children is affected both by current public education spending and by the level of upward mobility. Using a newly compiled dataset of roll call voting on California education legislation matched with electoral district-level upward mobility we find that the likelihood of a legislator voting "no" on redistributive education bills decreases by 10 percentage points when upward mobility in his electoral district decreases by a standard deviation.
... This paper also relates to a literature that examines the role of trade on legislators' voting activity. Conconi et al. (2012) examine the impact of district-level trade competition on Representatives' votes to grant U.S. Presidents Fast Track Authority vis a vis the negotiation of trade agreements, and Conconi et al. (2015) examine the role of skilled labor abundance in Representatives' votes on trade and immigration bills. Blonigen and Figlio (1998) nd that legislators' votes for bills related to trade protection are positively associated with direct foreign investment. ...
This paper examines the impact of trade liberalization on U.S. Congressional elections. We find that U.S. counties subject to greater competition from China via a change in U.S. trade policy exhibit relative increases in turnout, the share of votes cast for Democrats and the probability that the county is represented by a Democrat. We find that these changes are consistent with Democrats in office being more likely than Republicans to support legislation limiting import competition or favoring economic assistance.
Immigration policies in western democracies have often been contrary to the predictions of the mainstream theory of international economics. Political parties that are predicted to adopt policies beneficial for lower-income constituents have not protected workers from labor-market competition. Nor have workers been protected from a fiscal burden of financing incomes and benefits for welfare-dependent immigrants. We explain the contradiction by immigrants being future voters. We give a hearing to alternative interpretations.
Despite increasing polarization in the House of Representatives, preferential trade agreements (PTAs) often pass not only with, but often because of, support from both parties. What explains these patterns? When do members cross party lines to support (or oppose) trade legislation? We argue that members are both ideologically and electorally motivated. Further, we argue that the relative balance of these incentives varies across the membership in meaningful ways. We examine House votes on 11 PTAs and find that ideology and district trade position have independent effects on support for free trade. We also find that the effect of trade position is conditioned by the ideology of the legislator; moderates are more responsive to their constituents' interests on trade.
Theoretical models of the political economy of trade policy predict that trade liberalization is driven by the political influences of the capitalists through their monetary contributions to the political campaigns of politicians, and the economic interests of the electorate. The latter is based on untested assumption that voters can hold their representatives accountable by conditioning their voting decision on the observed policy choices of their representatives. The purpose of this thesis is to examine the empirical content of these theoretical predictions, and the validity of their underlying assumption. Using data for congressional voting on six highly controversial trade liberalization bills, a number of robust results are obtained. First, party platform, presidential regime, contributions by protectionist and free-trade lobbies, and personal ideological views of the legislators are found to be the key determinants of the positions taken by the legislators on trade bills. The constituents’ economic interests and adverse employment effects of NAFTA have also influenced the legislators’ voting behavior. The study also finds that the salience of trade policy, i.e., the extent to which voters base their voting decision on the observed trade policy choice of their representative, was very low during the time of NAFTA but increased markedly over a decade. The position taken by a representative on NAFTA and GATT had no effect on the election performance of representatives on the 1994 mid-term election, while legislators who supported CAFTA have experienced a moderate decrease in their vote-share (compared to those who voted against CAFTA) on the 2006 mid-term election. These results are robust to different sensitivity checks and estimation techniques.
Data on campaign contributions of PACs (political action committees) in the US does not contain the PACs' issues of concern. Additionally, while recent US lobbying data details the issues of concern for an interest group, it does not detail the Congressional representatives lobbied by the interest group. Expanding the time-frame of earlier work, I confirm that PACs engaging in lobbying and campaign contributions account for the majority of such political money despite representing a small minority of all PACs. I show how this allows the construction of a novel dataset that decomposes representative-specific contributions across issues as well as issue-specific lobbying expenditures across representatives. This decomposition can qualitatively affect results regarding the relationship between political money and Congressional voting behavior on trade policy.
We examine new survey data on attitudes towards international trade showing that women are significantly less likely than men to support increasing trade with foreign nations. This gender difference remains large even when controlling for a broad range of other demographic and socio-economic characteristics among survey respondents. And the gender gap widens markedly among older and married respondents: while male attitudes are relatively stable, women are far more likely to oppose trade when they are older and when they are married. This suggests that labor-market dynamics associated with maternity may be playing an important role in shaping attitudes. Women with family responsibilities that make it more costly or difficult for them to switch jobs may be more sensitive to the risks of economic dislocation associated with trade openness. We fail to find direct evidence supporting this proposition, however, since various indicators of the risks and the costs of job loss do not appear to be related at all to the gender gap in trade preferences or it’s expansion among older and married respondents. We also do not find any strong evidence that gender differences in non-material values or along ideological dimensions have any affect on attitudes toward trade. Female protectionism thus represents a compelling puzzle and, we suggest, a good focal point for theoretical work on the role of gender in political economy.
Over the last 25 years, there has been a steady increase in party voting in the U.S. House, with much of this increase attributed to changes in the South. We argue that changes in the North are also important. Democrats now win a higher percentage of elections in the North, and a larger percentage of the congressional party comes from the North. Northern Democrats became steadily more liberal in the 1980s and 1990s, which increased the liberal record of the entire party. We examine two factors in the rise in liberal voting in the North. First, Democrats now win more seats in urban, lower-income, nonwhite districts that tend to generate liberal voting records. Second, there has been an increase in the number of districts that tend to produce liberal-voting Democrats. Together, these changes have resulted in more liberal Democratic Party voting and greater polarization between the parties.
We estimate the impact of press coverage on citizen knowledge, politicians' actions, and policy. We find that voters living in areas where, for exogenous reasons, the press covers their U.S. House representative less are less likely to recall their representative's name and less able to describe and rate him or her. Congressmen who are less covered by the local press work less for their constituencies: they are less likely to stand witness before congressional hearings, to serve on constituency-oriented committees (perhaps), and to vote against the party line. Finally, federal spending is lower in areas with exogenously lower press coverage of congressmen. (c) 2010 by The University of Chicago. All rights reserved..
We study how immigration policies that impose capital and skill requirements would be determined under majority voting when native agents differ in their wealth holdings and vote to maximize their income.
Several models are presented in which factor mobility leads to an increase in the volume of world trade. The models share the common characteristic that the basis for trade is something other than differences in relative factor endowments. These alternative bases for trade include returns to scale, imperfect competition, production and factor taxes, and differences in production technology. Taken together, the models suggest a more general idea: the widely held notion that trade in goods and factors are substitutes is in fact a rather special result which is a general characteristic only of factor proportions models.
This paper analyzes the political sustainability of the welfare state in an environment where immigration is the main demographic force and where governments are able to influence the size and skill composition of immigration flows. Specifically, I present a dynamic political-economy model where both income redistribution and immigration policy are chosen by majority vote. Voters take into account their children's prospects of economic mobility and the future political consequences of today's policies. Over time, the skill distribution evolves due to intergenerational skill upgrading and immigration. I consider three immigration and citizenship regimes. In the first, immigrants stay permanently in the country and citizenship is obtained by birthplace (jus soli). In the second regime immigration is also permanent but citizenship is passed only by bloodline (jus sanguinis). In the third regime immigrants are only admitted temporarily and cannot vote. Our main finding is that under permanent migration and jus soli there exist equilibria where income redistribution is sustained indefinitely, despite constant skill upgrading in the population. However, this is not the case in the other two regimes. The crucial insight is that unskilled voters trade off the lower wages from larger unskilled immigration with the increased political support for redistributive transfers provided by the children of the current immigrants. In contrast, in the regimes where immigrants and their children do not gain the right to vote, unskilled voters oppose any unskilled immigration and political support for income transfers vanishes. We argue that these mechanisms have important implications for the ongoing debates over comprehensive immigration reform in the US and elsewhere.
In a general equilibrium model of a labor economy, the size of government, measured by the share of income redistributed, is determined by majority rule. Voters rationally anticipate the disincentive effects of taxation on the labor-leisure choices of their fellow citizens and take the effect into account when voting. The share of earned income redistributed depends on the voting rule and on the distribution of productivity in the economy. Under majority rule, the equilibrium tax share balances the budget and pays for the voters' choices. The principal reasons for increased size of government implied by the model are extensions of the franchise that change the position of the decisive voter in the income distribution and changes in relative productivity. An increase in mean income relative to the income of the decisive voter increases the size of government.
Fast Track Authority (FTA) is the institutional procedure in the Unites States whereby Congress grants to the President the power to negotiate international trade agreements. Under FTA, Congress can only approve or reject negotiated trade deals, with no possibility of amending them. In this paper, we examine the determinants of FTA voting decisions and the implications of this institutional procedure for trade negotiations. We describe a simple two-country trade model, in which industries are unevenly distributed across constituencies. In the foreign country, trade negotiating authority is delegated to the executive, while in the home country Congress can retain the power to amend trade agreements. We show that legislators' FTA voting behavior depends on the trade policy interests of their own constituencies as well as those of the majority of Congress. Empirical analysis of the determinants of all FTA votes between 1974 (when fast track was first introduced) and 2002 (when it was last granted) provides strong support for the predictions of our model.
Recent studies argue that the spread-adjusted Taylor rule (STR), which includes a response to the credit spread, replicates monetary policy in the United State. We show (1) STR is a theoretically optimal monetary policy under heterogeneous loan interest rate contracts in both discretionay and commitment monetary policies, (2) however, the optimal response to the credit spread is ambiguous given the financial market structure in theoretically derived STR, and (3) there, a commitment policy is effective in narrowing the credit spread when the central bank hits the zero lower bound constraint of the policy rate.
This paper examines voting by U.S. Representatives on the North American Free Trade Agreement, the Uruguay Round Agreement, and most-favored nation status for China. Using recent political economy models of trade policy to formulate an empirical specification of congressional voting behavior, we find evidence that campaign contributions influenced legislators' votes on the NAFTA and Uruguay Round bills. Labor group contributions were associated with votes against freer trade while business contributions were associated with votes in favor of freer trade. Economic conditions in each member's district as well as the broad policy views of the legislators also affected representatives' voting decisions. Copyright 2000 by Kluwer Academic Publishers
Today's labor-scarce economies have open trade and closed immigration policies, while a century ago they had just the opposite, open immigration and closed trade policies. Why the inverse policy correlation, and why has it persisted for almost two centuries? This paper seeks answers to this dual policy paradox by exploring the fundamentals which have influenced the evolution of policy: the decline in the costs of migration and its impact on immigrant selectivity, a secular switch in the net fiscal impact of trade relative to immigration, and changes in the median voter. The paper also offers explanations for the between-country variance in voter anti-trade and anti-migration attitude, and links this to the fundamentals pushing policy.
This paper analyzes welfare-state determinants of individual attitudes towards immigrants - within and across countries - and their interaction with labor-market drivers of preferences. We consider two different mechanisms through which a redistributive welfare system might adjust as a result of immigration. Under the first scenario, immigration has a larger impact on individuals at the top of the income distribution, while under the second one it is low-income individuals who are most affected through this channel. Individual attitudes are consistent with the first welfare-state scenario and with labor-market determinants of immigration attitudes. In countries where natives are on average more skilled than immigrants, individual income is negatively correlated with pro-immigration preferences, while individual skill is positively correlated with them. These relationships have the opposite signs in economies characterized by skilled migration (relative to the native population). Such results are confirmed when we exploit international di®erences in the characteristics of destination countries' wel-fare state. Classification-JEL Codes: F22, F1, J61
The Grossman-Helpman "Protection for Sale" model, concerning the political economy of trade protection, yields clear predictions for the cross-sectional structure of import barriers. Our objective is to check whether the predictions of the Grossman-Helpman model are consistent with the data and, if the model finds support, to estimate its key structural parameters. We find that the pattern of protection in the United States in 1983 is broadly consistent with the predictions of the model. A surprising finding is that the weight of welfare in the government's objective function is many times larger than the weight of contributions.
Recent studies of individual attitudes toward immigration emphasize concerns about labor-market competition as a potent source of anti-immigrant sentiment, in particular among less-educated or less-skilled citizens who fear being forced to compete for jobs with low-skilled immigrants willing to work for much lower wages. We examine new data on attitudes toward immigration available from the 2003 European Social Survey. In contrast to predictions based on conventional arguments about labor-market competition, which anticipate that individuals will oppose immigration of workers with similar skills to their own but support immigration of workers with different skill levels, we find that people with higher levels of education and occupational skills are more likely to favor immigration regardless of the skill attributes of the immigrants in question. Across Europe, higher education and higher skills mean more support for all types of immigrants. These relationships are almost identical among individuals in the labor force (that is, those competing for jobs) and those not in the labor force. Contrary to the conventional wisdom, then, the connection between the education or skill levels of individuals and views about immigration appears to have very little, if anything, to do with fears about labor-market competition. This finding is consistent with extensive economic research showing that the income and employment effects of immigration in European economies are actually very small. We find that a large component of the link between education and attitudes toward immigrants is driven by differences among individuals in cultural values and beliefs. More educated respondents are significantly less racist and place greater value on cultural diversity than do their counterparts; they are also more likely to believe that immigration generates benefits for the host economy as a whole.
National security has always been an integral consideration in immigration policy, never more so than in the aftermath of September 11, 2001. This is the first history of American immigration policy written in the post-9/11 environment to focus specifically on the role of national security considerations in determining that policy. As LeMay makes clear, this is not the first time America has worried about letting foreigners through our gates.
By the time readers reach the final chapter, in which current policies regarding the interplay between immigration and national security are discussed, they have the historical perspective necessary to assess the pros and cons of what is happening today. They are able to more clearly answer questions such as: Does putting the Immigration and Naturalization Service under the Department of Homeland Security make the country more secure? Do vigilantes improve border security? How are we handling the balance between national security and civil liberties compared to the ways in which we handled it during World Wars I and II and the Cold War? LeMay does not advocate a specific policy; rather, he gives citizens and students the tools to make up their own minds about this enduringly controversial issue.
Siebzig Jahre waren 1912 seit der Verlagsgründung durch Julius Springer vergangen, und wiederum siebzig Jahre sind seither verstrichen. Aus heutiger Sicht ist also das Jahr 1912 ein zeitlicher „Äquator“ in der Geschichte des Springer-Verlags.
The domestic politics of international trade seem to differ in fundamental ways from the domestic politics of immigration, but it is difficult to say exactly how and, more importantly, why. This paper uses a common frame of reference, simple endogenous policy models, as a way into this issue. These models capture the essential insight underlying much political economy analysis that material interests drive policy preferences. Part of the claim made in this paper is that trade politics appear to be essentially about material interest, while immigration politics are not. Related to this claim, however, is the complementary claim that the politics of these two seemingly similar issues are also organized in fundamentally different ways. The argument proceeds in five parts. The first part describes the general structure of endogenous policy models; the second provides a brief overview of theoretical and empirical work on trade; the third provides a similar overview of contemporary research on immigration politics; the fourth compares the political structures of the politics in these two domains; the fifth part concludes.
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We analyze two cross-country data sets that contain information on attitudes toward trade as well as a broad range of socio-demographic and other indicators. We find that pro-trade preferences are significantly and robustly correlated with an individual's level of human capital, in the manner predicted by the factor endowments model. Preferences over trade are also correlated with the trade exposure of the sector in which an individual is employed: individuals in non-traded sectors tend to be the most pro-trade, while individuals in sectors with a revealed comparative disadvantage are the most protectionist. Third, an individual's relative economic status has a very strong positive association with pro-trade attitudes. Finally, non-economic determinants, in the form of values, identities, and attachments, play an important role in explaining the variation in preferences over trade. High degrees of neighborhood attachment and nationalism/patriotism are associated with protectionist tendencies.
The United States Immigration Act of 1965 was followed by a steep upward trend in total immigration, and by a dramatic shift in the source-country composition away from Europe and towards Asia and Latin America. In this paper I ask if and how the 1965 Act generated these unanticipated consequences. The result was partly because of the pre-existing legislation and partly because of the admission of immigrants outside the terms of the Act. However, much of it was a result of the Act itself, and specifically because of family reunification effects that were larger, the poorer the source country.
This paper shows that electoral incentives deter politicians from supporting trade liberalization. We focus on all major trade liberalization bills introduced since the early 1970s in the U.S. Congress, in which House and Senate members serve respectively two- and six-year terms and one third of senators face elections every two years. We show that senators are more likely to support trade liberalization than House representatives. However, this result does not hold for the last generation of senators, who face elections at the same time as House members, suggesting that inter-cameral differences are driven by term length. Considering senators alone, we find that the last generation is less likely to support trade liberalization than the previous two. This result is pervasive and holds both when comparing the behavior of different senators voting on the same bill and that of individual senators voting on different bills. The protectionist effect of election proximity disappears for senators who are retiring or hold safe seats.
Recent research on political attitudes towards immigration often pits arguments emphasizing economic self-interest against ideological or cultural explanations. Many of these studies conceptualize immigration policy along a single dimension instead of disaggregating it into its distinct policy dimensions. Conditional on the type of immigration policy, different explanations should have more or less explanatory power. We disaggregate immigration policy into six different dimensions and provide theoretical scope conditions for when ideological and economic factors should matter. We test these predictions on votes on immigration policy in the US House of Representatives from 1979-2006. We advance the debate on the determinants of immigration policy by showing that both economic self-interest and ideological explanations can be powerful, depending upon the type of immigration policy under consideration.
Preface. 1. Immigration to the United States: Politics and Policy. 2. Public Opinion and Interest Group Influence. 3. Issues in the Contemporary Immigration Debate on Capitol Hill. 4. The Congressional Politics of Immigration Policy, 1965-1982. 5. The Congressional Politics of Immigration Policy, 1982-1994. 6. Immigration Reform in the 104th Congress. 7. Congress and the Future of Immigration Policy. Sources. Index. About the Authors.
We develop a two-country, two-sector model with a continuum of workers to address the link between migration and trade where policy is determined by a simple referendum. In particular, we address two questions. First, are states already in free trade areas more likely to support full integration than states without free trade? Second, is trade liberalization more likely to be supported by a simultaneous referendum on trade and migration than in one on trade alone? The key to our analysis is the recognition that for free trade, migration, or trade and migration to be adopted, the relevant policy must pass the referendum in both countries. We identify conditions under which that occurs. Our model provides an interpretation of the evolution of the politics of economic integration related to NAFTA and European Union.
This chapter reviews the wealth of research on the behavior, experiences, and accomplishments of women in elective office in the United States to assess what we have learned and to identify some of the most promising avenues for future research. Motivated in large part by questions and concerns about women's political representation, this research has established a clear, empirical link between women's descriptive and substantive representation. Throughout the policy-making process – and beyond – female officeholders are often more likely than their male colleagues to act for women or women's interests. A closer look at this research also reveals that these links are by no means guaranteed or universal; descriptive representation is neither absolutely necessary nor entirely sufficient for substantive representation to occur. Some female officeholders are more likely than others to act for women; some male politicians are more likely than others to do so; some governing institutions are more likely than others to do so. Although few, if any, researchers would deny the imperfect nature of the relationship between women's descriptive and substantive representation, few (Dodson 2006; Dolan and Ford 1998; Reingold 2000) have made it their central focus.Future research, I argue, needs to recognize and explore the complex, contingent, and gendered processes by which the linkages between the descriptive and substantive representation of women are strengthened or weakened.
The extent to which political conflict over U.S. trade policy has led to clashes between broad-based class coalitions has varied significantly over time during the past two centuries. I argue that much of this variation can be explained by changes in economywide levels of interindustry factor mobility. Class distinctions between voters are more economically and politically salient when interindustry mobility is high; when mobility is low, industry distinctions become more critical and tend to split apart broader political coalitions. I report evidence indicating large changes in levels of labor and capital mobility over the last two centuries. These changes coincide with significant shifts in the character of American trade politics. Analysis of congressional voting on 30 major pieces of trade legislation between 1824 and 1994 provides evidence of large swings in coalition patterns.
This article examines why members of the U.S. House of Representatives voted for H.R. 4437, the controversial 2005 bill to construct a 700-mile immigration barrier along the U.S.-Mexican border and to criminalize illegal presence and aid to undocumented immigrants. Logit analysis suggests that being a first-term House member or a Republican and representing a district that was in the South or the West or heavily blue-collar substantially boosted the odds of supporting H.R. 4437. If a member's district was disproportionately Asian, Latino, or, especially, African American, he or she was instead more likely to oppose the measure.
Do preferences toward globalization strategies vary across public-finance regimes? In this paper, we use data on individual preferences toward immigration and trade policy to examine how pre-tax and post-tax cleavages differ across globalization strategies and state fiscal jurisdictions. High exposure to immigrant fiscal pressures reduces support for freer immigration among U.S. natives, especially the more skilled. The magnitude of this post-tax fiscal cleavage is comparable to the pre-tax labor-market effects of skill itself. There is no public-finance variation in opinion over trade policy, consistent with U.S. trade policy having negligible fiscal-policy impacts. Public finance thus appears to shape opinions toward globalization strategies.
Immigration is today one of the most hotly debated policy issues in the United States. Despite marked divergence of opinion even within political parties, several important reforms have been introduced in the post 1965 era. The purpose of this paper is to carry out a systematic analysis of the drivers of the voting behavior of US representatives on immigration policy in the period 1970-2006, and in particular to assess the role of economic factors at the district level. Our findings suggest that representatives from more skilled labor abundant districts are more likely to support an open immigration policy towards the unskilled, whereas the opposite is true for representatives from more unskilled labor abundant districts. This evidence is robust to the introduction of an array of additional economic and non-economic characteristics of the districts, and suggests that a simple factor analysis model can go a long way in explaining voting on immigration policy.
This book expounds trade theory emphasizing that a trading equilibrium is general rather than partial, and is often best modelled using dual or envelope functions. This yields a compact treatment of standard theory, clarifies some errors and confusions, and produces some new departures. In particular, the book (i) gives unified treatments of comparative statics and welfare, (ii) sheds new light on the factor-price equalization issue, (iii) treats the modern specific-factor model in parallel with the usual Heckscher-Ohlin one, (iv) analyses the balance of payments in general equilibrium with flexible and fixed prices, (v) studies imperfect competition and intra-industry trade.
The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intra-industry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We parameterize the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occurred between 1989 and 2004, and then the gains and losses from migration which are expected to occur if legal barriers to labor mobility are substantially reduced. The lower barriers to migration would result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe.
Past literature has found evidence that labor market attributes affect individuals' trade policy preferences in a manner consistent with theories of international trade. This paper shows that, with the exception of education, the relationships between labor market attributes and trade policy preferences are not robust in US survey data. This suggests that either our proxies of labor market attributes are poor or our theories for what drives trade policy preferences need to be revisited.
A reason why immigration policy is such a contended issue is that often immigrants end up obtaining the right to vote and, hence, may affect future policies. This paper offers a dynamic, general equilibrium model of immigration policy. In each period, a heterogeneously skilled population chooses an immigration policy by majority vote. Voters anticipate that immigration affects the skill premium and the skill composition of the electorate. The main insight is the existence of a trade-off between skill complementary immigration and the resulting shift in political power. I argue that a reasonably parameterized version of the model is consistent with the main features of US immigration.
We model the endogenous determination of policy towards international factor mobility. In a common agency setting, domestic interest groups bid for protection from the government and the incumbent politicians maximize a welfare function that depends both on domestic voters' welfare and contributions collected. We characterize equilibrium policies in the price space and show how the degree of complementarity among inputs determines the outcome. We establish a similar result for quotas, allowing for partial rent capturing. For the strategic environment under consideration, we also establish a general equivalence result between tariffs and quotas if capturing is complete.
This paper demonstrates that there is a robust empirical association between the extent to which an economy is exposed to trade and the size of its government sector. This association holds for a large cross-section of countries, in low- as well as high-income samples, and is robust to the inclusion of a wide range of controls. The explanation appears to be that government consumption plays a risk-reducing role in economies exposed to a significant amount of external risk. When openness is interacted with explicit measures of external risk, such as terms-of-trade uncertainty and product concentration of exports, it is the interaction terms that enter significantly, and the openness term loses its significance (or turns negative). The paper also demonstrates that government consumption is the majority of countries.
This paper empirically analyzes economic and noneconomic determinants of individual attitudes toward immigrants, within and across countries. The two survey data sets used, covering a wide range of developed and developing countries, make it possible to test for interactive effects between individual characteristics and country-level attributes. In particular, theory predicts that the correlation between pro-immigration attitudes and individual skill should be related to the skill composition of natives relative to immigrants in the destination country. Skilled individuals should favor immigration in countries where natives are more skilled than immigrants and oppose it otherwise. Results based on direct and indirect measures of the relative skill composition are consistent with these predictions. Noneconomic variables also are correlated with immigration attitudes, but they don't alter significantly the labor-market results. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Grossman and Helpman (1994) present a theory of endogenous protection by explicitly modeling government-industry interactions for which mere "black-box" models previously existed. They obtain a Ramsey pricing-type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities. On the lobbying side, the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection. The model not only makes for richer theory in terms of rigor and elegance, but its predictions are directly testable. Whether the Grossman-Helman model stands up to real-world data is investigated in this paper. Predictions from both the protection side and lobbying side are tested using cross-sectional U.S. nontariff barrier data. We also compare the "second-generation" Grossman-Helpman model with a more traditional specification. Our results call for serious consideration of this model in the political economy literature. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
While anecdotal evidence suggests that interest groups play a key role in shaping immigration policy, there is no systematic empirical analysis of this issue. In this paper, we construct an industry-level dataset for the United States, by combining information on the number of temporary work visas with data on lobbying activity associated with immigration. We find robust evidence that both pro- and anti-immigration interest groups play a statistically significant and economically relevant role in shaping migration across sectors. Barriers to migration are lower in sectors in which business interest groups incur larger lobby expenditures and higher in sectors where labor unions are more important.
"According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices. This prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration. We provide an explanation for this inconsistency: the redistribution policies in the countries. Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers."
This paper examines the determinants of the U.S. House of Representatives 1996 vote on the "The Immigration in the National Interest Act." Public choice theory suggests that the voting behavior of legislators is affected by the interests of their constituencies, special interest politics, and by their ideology. The paper uses probit analysis to test the significance of the above factors. The results suggest that Representatives responded to the socioeconomic interests of their constituents as expected. However, in a surprising finding, pro-business legislators appear to have voted to restrict immigration.
[eng] We present a two-sided search model where agents differ by their human capital endowment and where workers of different skill are imperfect substitutes. Then the labor market endogenously divides into disjoint segments and wage inequality will depend on the degree of labor market segmentation. The most important results are : 1) overall wage inequality as well as within-group and between-group inequalities increase with relative human capital inequality ; 2) within-group wage inequality decreases while between-group and overall wage inequalities increase with the efficiency of the search process ; 3) within-group, between-group and overall wage inequalities increase with technological changes. [fre] Immigration et justice sociale. . Cet article est d�di� � la m�moire d'Yves Younes qui nous a quitt�s en mai 1996, et dont les derni�res r�flexions sur l'importance du ph�nom�ne migratoire dans les �tats-Unis des ann�es 1980-1790 m'ont beaucoup influenc�.. L'ouverture des fronti�res entre le Nord et le Sud peut-elle se retourner contre les plus d�favoris�s du monde, c'est-�-dire les non-qualifi�s du Sud ?. Avec deux facteurs de production, les migrations Sud-Nord b�n�ficient tou�jours aux moins qualifi�s du Sud, puisqu'ils y sont le facteur le plus abondant. Mais avec trois facteurs de production (trois niveaux de qualifications, ou deux niveaux et un facteur capital imparfaitement mobile), l'ouverture des fronti�res peut conduire � une baisse du salaire des moins qualifi�s du Sud si leur compl�mentarit� avec le travail tr�s qualifi� ou le capital du Nord est suffisamment faible compar�e � celle des sudistes plus qualifi�s.. Plusieurs �tudes r�centes sugg�rent effectivement que les �lasticit�s de compl�mentarit� chutent brutalement au-del� d'un certain �cart de qualification. Cependant, rien ne prouve que ces effets soient suffisamment forts pour que l'ouverture optimale des fronti�res du point de vue de la justice sociale
Trade theorists have come to understand that their theory is ambiguous on the question: are trade and factor flows substitutes? While this sounds like an open invitation for empirical research, hardly any serious econometric work has appeared in the literature. This paper uses history to fill the gap. It treats the experience of the Atlantic economy between 1870 and 1940 as panel data with almost 700 observations. When shorter run business cycles and ‘long swings’ are extracted from the panel data, substitutability is soundly rejected. When secular relationships are extracted over longer time periods and across trading partners, once again substitutability is soundly rejected. Finally, the paper explores immigration policy and finds that policy-makers never behaved as if they viewed trade and immigration as substitutes.
In this paper, we examine the correlation between sectoral shocks and border enforcement in the United States, the U.S. government's main policy instrument for combating illegal immigration. We see whether border enforcement falls following positive shocks to sectors that are intensive in the use of undocumented labour, as would be consistent with political economy models of illegal immigration. We find that border enforcement is negatively correlated with lagged relative price changes in the apparel, fruits and vegetables, and livestock industries and with housing starts in western United States, suggesting that authorities relax border enforcement when demand forundocumented labour is high.
Economie politique, chocs sectoriels et vigilance aux frontières. Dans ce mémoire, les auteurs examinent la corrélation entre les chocs sectoriels et la vigilance aux frontières aux Etats-Unis. La vigilance aux frontières est le principal instrument de politique publique utilisé par le gouvernement américain pour combattre l'immigration illégale. On se demande si la vigilance aux frontières se relâche à la suite de chocs positifs dans des secteurs qui utilisent relativement plus de travailleurs illégaux, ainsi que le suggèrent les modèles d'économie politique de l'immigration illégale. Les principaux résultats indiquent que la vigilance aux frontières est co-reliée négativement (avec un délai) avec les changements de prix relatifs dans les secteurs du vêtement, des fruits et légumes, et du bétail, ainsi qu'avec le nombre de mises en chantier dans la construction domiciliaire dans l'ouest des Etats-Unis. Voilà qui suggère que les autorités relâchent la vigilance aux frontières quand la demande de travailleurs illégaux augmente.