Identity Politics and Trade Policy

Gene M. Grossman, Elhanan Helpman

Research output: Contribution to journalArticlepeer-review

Abstract

We characterize trade policies that result from political competition when assessments of well-being include both material and psychosocial components. The material component reflects, as usual, satisfaction from consumption. Borrowing from social identity theory, we take the psychosocial component as combining the pride and self-esteem an individual draws from the status of groups with which she identifies and a dissonance cost she bears from identifying with those that are different from herself. In this framework, changes in social identification patterns that may result, for example, from increased income inequality or heightened class or ethnic tensions, lead to pronounced changes in trade policy. We analyse the nature of these policy changes.

Original languageEnglish
Pages (from-to)1101-1126
Number of pages26
JournalReview of Economic Studies
Volume88
Issue number3
DOIs
StatePublished - 1 May 2021
Externally publishedYes

Keywords

  • Political economy
  • Populism
  • Protectionism
  • Social identity
  • Tariff formation

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