Globalization and its (Dis-)Content: Trade Shocks and Political Attitudes

Abstract

The last two decades have seen a dramatic rise of manufacturing trade between highwage and low-wage countries. We identify the causal effect of trade-integration on voting behavior in German local (sub-national) labor markets from 1987–1998 and 1998–2009 using both the Iron Curtain’s fall and China’s WTO ascension as exogenous shocks. The only segment of the political spectrum that responds is the extreme right, which gains with exogenous increases in import competition, and loses from export access. Overall turnout is also weakly increasing with import competition. Both radicalization and moderation appear to be driven by the labor market adjustments to trade shocks. We supplement our results with an individual-level analysis using the German Socioeconomic Panel.