Solidarity with Losers of Free Trade

Grossman, Gene M./ Helpman, Elhanan (2018), Identity Politics and Trade Policy: National Bureau of Economic Research, NBER Working Papers 25348 Cambridge, MA: National Bureau of Economic Research. This paper argues against the dominanting view in the literature on international trade that people perceive trade relations first and foremost as determined by clear cost-benefit calculations. Instead the growing popular scepticism against free trade (particularly in the United States) is driven by a strong solidarity with the losers of international trade. The social environement pressures its members not to deviate too far from the community they live in.