Abstract
How does globalization affect politics? One of the most controversial aspects of globalization is offshoring, when manufacturing operations and business functions move abroad. Although voters generally dislike offshoring, it remains unclear how moving jobs abroad impacts democratic elections. Using a difference-in-differences estimation strategy, the author finds that incumbent government parties lose more votes in municipalities where a local plant moved production abroad between elections than in municipalities that did not experience such an event. The result holds across various time periods, different incumbent parties and diverse types of elections. In both national and regional elections, voters punish incumbent government parties when a local firm moves production abroad. Incumbent parties' vote shares fall as the number of jobs lost due to offshoring increases. In multiparty governments, voters disproportionately punish the largest coalition party for offshoring. The results of an original survey administered in Spain verify the importance of offshoring for voters' retrospective evaluations of incumbents.
Highlights
How does globalization affect politics? One of the most salient aspects of modern-day globalization is offshoring, when firms move their manufacturing operations or business functions abroad.1 When asked what globalization brings to mind, 45 per cent of European respondents said they think about the offshoring of jobs to countries with cheap labor.2 Despite offshoring’s salience to voters, it remains unclear how this controversial facet of globalization impacts democratic politics
Let Y1it and Y0it indicate the pair of potential vote shares that the incumbent government party attains in municipality i at time t when exposed to the treatment or control condition between the two elections
To assess the empirical validity of the parallel-trends assumption, I examine whether the PP vote share in municipalities affected by offshoring between the 2000 and 2004 elections followed a similar trend to the control municipalities in the years prior to the treatment
Summary
Surveys show that voters generally dislike offshoring (for example, Mansfield and Mutz 2013). Given the negative impact of offshoring on the local area, people in the affected community may vote against the incumbent government following a local offshoring event.7 They may do so either because: (1) their own economic fortunes decline along with the region’s or as a result of (2) local sociotropism. In January 2003, more than 2,000 people protested the offshoring of production from the Moulinex factory in Barbastro, Spain to China, which resulted in 150 job losses.9 This is not to suggest that informed but personally unaffected voters have a sophisticated model of the distributional impact of offshoring. It is to propose that voters typically know when their communities are doing poorly and that offshoring probably played some role in the problem (Frieden 2018) Both personal pocketbook considerations and sociotropic attitudes may lead voters to cast an anti-incumbent vote following a local offshoring event. If voters believe that governments in a highly globalized world have little ability to sway firms’ decisions about production locations, they may discount or even ignore offshoring in their retrospective evaluations of incumbents
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