Political consequences of free trade: Chinese imports and the shift of political views in the EU

Abstract: This study analyses the effect of an exogenous increase in Chinese imports on political views in 9 EU countries over the period 2000-2009 by exploiting initial regional variation in industry specialization of labour markets. The labour market data is combined with data on industry specific Chinese imports to create a measurement of region-specific exposure to import penetration. To avoid endogeneity, I instrument Chinese imports to the EU countries by Chinese imports to six extra-EU countries. By using information on respondents’ occupations, I decompose the effect by those directly, mainly manufacturing industries, and those indirectly affected by increased import penetration. Those directly affected become generally less trusting of established institutions as well as more likely to place their political views to the left on the political scale. The results also show the discontent arising from import penetration to be very general, suggesting that the change in political views is more populist in nature than aimed specifically anti-globalization.