Diana van Patten (Program on Political Economy Seminar)


Thursday, September 30, 2021, 4:30pm to 5:45pm


CGIS Knafel, room K354

Diana van Patten (Yale), “Voting on a Trade Agreement: Firm Networks and Attitudes Towards Openness"


This paper exploits a natural experiment to study the extent to which attitudes towards trade reflect economic fundamentals. In 2007, Costa Rica was the first developing country to put a free trade agreement (FTA) to a national referendum; with only one question on the ballot, 60% of Costa Rican adult citizens casted a vote on whether they wanted a trade agreement (CAFTA-DR) to be ratified, or not. We use disaggregated results of the referendum and match these results with detailed employer-employee data, firm customs and balance-sheet data, firm-to-firm transactions data, and data on household composition and expenditures. We document that a firm’s exposure to the FTA significantly influences the attitudes of its employees towards trade policy. We find that high-skilled workers are, on average, more likely to be in favor of the free trade agreement, and that within-industry heterogeneity is key in explaining votes, as compared with sector exposure. We find a role for local labor market competition in explaining vote shares, in particular for households employed in non-tradable sectors. Finally, we compare the importance of the earnings channel with respect to the expenditures channel, and document that both are salient in explaining voting behavior.

Co-sponsored by FAS and IQSS, the Program on Political Economy (PE) supports research-related activities that integrate the study of economics and politics, whether by studying economic behavior in the political process or political behavior in the marketplace. In general, positive political economy is concerned with showing how observed differences among institutions affect political and economic outcomes in various social, economic, and political systems and how the institutions themselves change and develop in response to individual and collective beliefs, preferences, and strategies.

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All interested faculty and students are invited to attend.