Do People Think like Stolper-Samuelson?  Part I 

 In face of the fierce political disagreements over free trade taking place in the US and elsewhere, it's critical we try to understand how people think about trade policies. A growing body of scholarly research has examined survey data on attitudes toward trade among voters, focusing on individual determinants of protectionist sentiments. These studies have converged upon one central finding: fears about the distributional effects of trade openness among less-educated, blue-collar workers lie at the heart of much of the backlash against globalization in the United States and other advanced economies. Support for new trade restrictions is highest among respondents with the lowest levels of education (e.g., Scheve and Slaughter 2001a, 2001b; Mayda and Rodrik 2005; O’Rourke and Sinnott 2002). These findings are interpreted as strong support for the Stolper-Samuelson theorem, a classic economic treatment of the income effects of trade.  It predicts that trade openness benefits those owning factors of production with which their economy is relatively well endowed (those with high skill levels in the advanced economies) while hurting others (low skilled and unskilled workers). 
 


   
But is it really true that people think like Stolper-Samuelson (i.e. that more educated people favour trade because it will increase their factor returns)? The positive relationship between education and support for trade liberalization might also – and perhaps primarily – reflect the fact that more educated respondents tend to be more exposed to economic ideas about the overall efficiency gains for the national economy associated with greater trade openness, and tend to be less prone to nationalist and anti-foreigner sentiments often linked with protectionism. In our recent paper  “Learning to Love Globalization: 
Education and Individual Attitudes Toward International Trade“  we try to shed light on this issue.  More on this in a subsequent post tomorrow.