Kiel Institute for the World Economy
Information about this author at RePEc
NBER Working Papers and Publications
|March 2017||Instrumental Variables and Causal Mechanisms: Unpacking The Effect of Trade on Workers and Voters|
with Christian Dippel, Stephan Heblich, Rodrigo Pinto: w23209
It is often the case that an endogenous treatment variable causally affects an intermediate variable that in turn causally affects a final outcome. Using an Instrumental Variable (IV) identifies the causal effect of the endogenous treatment on both the intermediate and the final outcome variable, but not the extent to which the intermediate variable affects the final outcome. We present a new framework in which a single IV suffices to also estimate the causal effect of the intermediate variable on the final outcome. We use this framework to investigate to what extent German voters responded to the labor market turmoil caused by increasing trade with low-wage manufacturing countries. We first establish that import competition increased voters’ support for only extreme (right) parties. We th...
|December 2015||Globalization and Its (Dis-)Content: Trade Shocks and Voting Behavior|
with Christian Dippel, 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.