The forthcoming article “Global competition, local unions, and political representation: Disentangling mechanisms” by Michael Becher and Daniel Stegmueller is summarized by the author(s) below.
How does democracy function in the face of increased globalization? Our article examines the response of elected policymakers in the United States to the steep rise in import competition from China after 1990. It provides evidence that this economic shock altered how legislators in Congress voted on key economic issues. On average, legislators in districts hit by the shock were less likely to vote for bills targeted towards the less fortunate. We find that this change is to a significant degree due to the shock weakening labor unions. Altogether, the evidence suggests that unions constitute an important mechanism that links global competition to democratic representation.
While prior research has examined the effects of import competition on elections and legislative votes, it paid relatively little attention to disentangling mechanisms in general and the role of labor unions in particular. Building on the theory that unions can serve as a countervailing power that enhances the representation of non-elite workers in the political process but whose strength is susceptible to economic shocks, we draw on recent advances in the statistical analysis of mechanisms and roll-call data from the House of Representatives matched to district characteristics to assess the relevance of the union mechanism. It is well known that analyzing mechanisms is difficult. Intuitively, scholars face a double threat of confounding. One threat is about the treatment variable (here: import exposure). Another is about the mediator variable (here: union density). As we cannot randomize import competition and union density, we turn to a novel instrumental variable approach for causal mediation. Following research on international trade and labor unions, we employ separate instrumental variables for the treatment on trade shocks and the moderator variable on unions. We combine them in a semiparametric instrumental variable approach, which enables us to relax identification assumptions required in the standard regression approach for unpacking causal mechanisms.
We find that import competition in the 1990s did substantively reduce district-level unionization in the 2000s. In turn, by weakening unions, import competition reduced legislators’ support for compensation policies helping trade losers (e.g., extending unemployment benefits, job training, trade adjustment assistance). Through weaker unions, import competition also increased legislative support for additional trade liberalization. A central quantity of interest for our investigation is the relative magnitude of the union mechanism. How much of the effect of the economic shock on legislative votes is due to changes in union strength? Our decomposition suggests that about half of the effect of import exposure on declining legislative support for compensation works though the mechanism of weaker unions. On trade policy, unions account for approximately one third of the total effect in the direction of less opposition to further trade liberalization.
Our results underscore that, by undermining unions, import competition reduced democracy’s willingness to compensate and support workers and regions adversely affected by trade (at least in the US). It thus eroded a central component of the post-war “embedded liberalism” growth model, which combined free trade with domestic compensation underwritten by domestic institutions.
About the Author(s): Michael Becher is a Professor in political science at IE University and Daniel Stegmueller is an Associate Professor in the Department of Political Science at Duke University. Their research “Global competition, local unions, and political representation: Disentangling mechanisms” is now available in Early View and will appear in a forthcoming issue of the American Journal of Political Science.
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