Inequity Aversion and the International Distribution of Trade Protection

Authors


  • We would like to thank Mostafa Beshkar, John Bullock, Eric Dickson, Alan Gerber, Nuno Limao, Helen Milner, Daniel Nielson, Dustin Tingley, Michael Tomz, the Editor, and the reviewers for excellent comments on previous drafts. We are grateful for financial support from Yale University's MacMillan Center for International and Area Studies and the Institution for Social and Policy Studies and the Tuck School of Business at Dartmouth College. The data and replication files for this study are available at the ISPS Data Archive http://isps.research.yale.edu/research-2/data/.

Abstract

One important puzzle in international political economy is why lower-earning and less-skilled intensive industries tend to receive relatively high levels of trade protection. This pattern of protection holds across countries with vastly different economic and political characteristics and is not well accounted for in existing political economy models. We propose and model one possible explanation: that individual inequity aversion leads to systematic differences in support for trade protection across industries. We conduct original survey experiments in China and the United States and provide strong evidence that individual policy opinions about sector-specific trade protection depend on the earnings of workers in the sector. We also present structural estimates that advantageous and disadvantageous inequality influence support for trade protection in the two countries.

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