“Mind the Gap?” Rising income inequality and individual trade policy preferences

Abstract

How does rising income inequality affect individual attitudes toward international trade? While there exists a plethora of studies on the interlinkages between international trade and income inequality, the existing literature on individual trade policy preferences has not considered the role of inequality in shaping public opinion about international trade. By bringing these two separate strands of literature together, this study examines whether citizens associate income disparities with trade liberalization and, if so, how this linkage affects their attitudes toward international trade. Using data from a population-based survey-embedded experiment, this study identifies two key findings. First, individuals draw a link between skewed income distribution trends and international trade. Second, the perceived linkage between rising income inequality and trade liberalization is disconnected from the formation of trade policy preferences. These findings suggest that the association between rising income inequality and trade liberalization does not automatically lead citizens to endorse protectionist trade measures not because they are ignorant about the distributional effects of international trade. Rather, citizens fail to connect income inequality to foreign trade policy, because they may not perceive trade-induced inequality as unfair.