TY  - JOUR
AU  - Dutt,Pushan
AU  - Mitra,Devashish
TI  - Labor Versus Capital in Trade-Policy Determination: The Role of General-Interest and Special-Interest Politics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10084
PY  - 2003
Y2  - November 2003
UR  - http://www.nber.org/papers/w10084
L1  - http://www.nber.org/papers/w10084.pdf
N1  - Author contact info:
Pushan Dutt
INSEAD
1 Ayer Rajah Avenue
Singapore 138676
Fax: 65-6799-5499
E-Mail: Pushan.Dutt@insead.edu

Devashish Mitra
Department of Economics
The Maxwell School of Citizenship and
Public Affairs
133, Eggers Hall, Syracuse University
Syracuse, NY  13244
Tel: 315/443-6143
Fax: 315/443-3717
E-Mail: dmitra@maxwell.syr.edu
AB  - Trade policy depends on the extent to which the government wants to redistribute income as well as on a country's overall factor endowments and their distribution. While the government's desire to redistribute income itself is dependent on asset distribution, it is to a large extent also driven by the partisan nature of the government, i.e., whether it is pro-labor or pro-capital. Using cross-country data on factor endowments, inequality and government orientation, we find that, conditional on inequality, left-wing (pro-labor) governments will adopt more protectionist trade policies in capital-rich countries, but adopt more pro-trade policies in labor-rich economies than right-wing (pro-capital) ones. Also higher inequality is associated with higher protection in capital-abundant countries while it is associated with lower protection in labor-abundant countries. These results are consistent with the simultaneous presence of both general- as well as special-interest politics as determinants of protection within a two-factor, two-sector Heckscher-Ohlin framework. Overall, various statistical tests support an umbrella model (that combines both the general-interest as well as special-interest models) over each of the individual models.
ER  -