Labor versus capital in trade-policy: The role of ideology and inequality |
| |
Authors: | Pushan Dutt Devashish Mitra |
| |
Institution: | a INSEAD, 1 Ayer Rajah Avenue, Singapore 138676, Singapore b Department of Economics, The Maxwell School of Citizenship & Public Affairs, Syracuse University, Eggers Hall, Syracuse, NY 13244, USA c NBER, 1050 Massachusetts Avenue, Cambridge, MA 02138, USA |
| |
Abstract: | 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, holding government orientation constant, 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 inequality as well as ideology 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 ideology and inequality models) over each of the individual models. |
| |
Keywords: | F10 F11 F13 |
本文献已被 ScienceDirect 等数据库收录! |
|