Import competition and public attitudes towards trade

This report from UK think tank the IFS looks at changing public attitudes to trade in developed economies.

In this report, we use data from the Pew Global Attitudes Survey to analyse how public attitudes towards trade have changed over time in different developed economies, and how these attitudes differ across groups in the population. Attitudes towards trade in developed economies deteriorated in the 2000s even before the onset of the financial crisis, with declines tending to be greater in countries that also saw larger increases in Chinese import competition. Perhaps surprisingly, given that barriers to trade appear to be on the increase again after several decades of steady decline, attitudes towards trade appear broadly positive in many developed economies, and there has been a marked recovery in attitudes over the last decade. The data therefore do not show evidence of increasing scepticism in public attitudes towards free trade in recent years. This may partly reflect the fact that declines in manufacturing employment have slowed in countries such as the US and the UK.

Those with a university education are more likely to have a favourable impression of trade with other countries, and to believe that it has specific benefits in terms of creating jobs, reducing prices and increasing wages. Those without a university education tend to be more sceptical. This is consistent with evidence from studies showing that the effects of increased trade can be unequal, with relatively more adverse impacts for lower-skilled workers. By contrast, those with a university education are much more likely to only experience the upsides of increased trade. While the survey did not ask respondents to assess the impact of trade on jobs for their own education group, it is plausible that people answered these questions through the lens of their own group-specific experiences of trade’s impacts.

Our report also highlights some of the complexities in interpreting public attitudes towards trade. When asked about trade’s specific impacts on jobs, prices and wages, respondents are more likely to believe that trade has benefits through job creation than reduced prices or increased wages. In this respect, the public’s views differ from what we might expect from the various studies on trade’s economic impacts: economists tend to find that increased trade has immediate benefits in the form of lower consumer prices but that it may lead to a deterioration in outcomes for some groups of workers, particularly through reduced employment in some industries.

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