NBER Working Papers and Publications
|March 2017||Instrumental Variables and Causal Mechanisms: Unpacking The Effect of Trade on Workers and Voters|
with Robert Gold, Stephan Heblich, Rodrigo Pinto: w23209
We investigate the impact of import exposure on regional labor markets and voting behavior. Using a standard IV model, we find in German data from 1987–2009 that import exposure caused both significant labor market adjustments and increasing support for extreme-right parties. Our focus is on the question that naturally follows: to what extent was the effect of import exposure on labor markets responsible for the political response? The standard IV model cannot answer this question. We propose a new framework for mediation analysis in IV settings that can, while making minimal additional assumptions on the causal relations between the unobserved variables. We find that the effect of import exposure on voting that is mediated by labor market adjustments is larger than the total effect of imp...
|October 2016||Elite Identity and Political Accountability: A Tale of Ten Islands|
with Jean-Paul Carvalho: w22777
This paper examines the relationship between elite identity and political outcomes from a theoretical and empirical perspective. Elite members with distinct economic and social identities vote for or against an extractive policy, which benefits them at the expense of the citizenry. Voting is disciplined by the threat of citizen revolt, with some elite members being more accountable than others. The relationship between elite identity and political accountability is complex and non-monotonic. As their share in the elite grows, accountable elite members are more likely to vote for extractive policies. When the elite becomes too accountable as a whole, elite members may pursue extractive policies by altering the institutional framework. The model is grounded in an empirical exploration of ten...
|December 2015||Globalization and Its (Dis-)Content: Trade Shocks and Voting Behavior|
with Robert Gold, Stephan Heblich: w21812
We identify the causal effect of trade-integration with China and Eastern Europe on voting in Germany from 1987 to 2009. Looking at the entire political spectrum, we find that only extreme-right parties respond significantly to trade integration. Their vote share increases with import competition and decreases with export access opportunities. We unpack mechanisms using reduced form evidence and a causal mediation analysis. Two-thirds of the total effect of trade integration on voting appears to be driven by observable labor market adjustments, primarily changes in manufacturing employment. These results are mirrored in an individual-level analysis in the German Socioeconomic Panel.
|February 2015||The Rents From Trade and Coercive Institutions: Removing the Sugar Coating|
with Avner Greif, Daniel Trefler: w20958
The 19th century collapse of world sugar prices should have depressed wages in the British West Indies sugar colonies. It did not. We explain this by showing how lower prices weakened the power of the white planter elite and thus led to an easing of the coercive institutions that depressed wages e.g., institutions that kept land out of the hands of peasants. Using unique data for 14 British West Indies sugar colonies from 1838 to 1913, we examine the impact of the collapse of sugar prices on wages and incarceration rates. We find that in colonies that were poorly suited for sugar cane cultivation (an exogenous colony characteristic), the planter elite declined in power and the institutions they created and supported became less coercive. As a result, wages rose by 20% and incarceration rat...