March 7, 2001
|Contact:||Matthew J. Slaughter||(603) 646-2939|
|J. David Richardson||(202) 328-9000|
Washington, DCThe American public is split virtually down the middle on globalization. Workers with college degrees tend to support further liberalization of international trade, investment, and immigration while those with less education and fewer skills tend to resist such initiatives. The cleavage in these views reflects the very different wage performance across skill levels in the United States since the early 1970s; less-skilled workers have experienced zero and even negative real growth during this period despite some progress in recent years.
Survey evidence suggests that a majority of the population endorses additional globalization if the losers from the process are assisted in meeting their adjustment requirements. Adjustment policies should therefore finance less-educated and less-skilled workers regardless of their industry of employment rather than on an industry-specific basis as with traditional trade adjustment assistance. These are the main conclusions of Kenneth F. Scheve and Matthew J. Slaughter in Globalization and the Perceptions of American Workers, the first publication of the Institute's new Globalization Balance Sheet project.
There is widespread agreement that a globalization backlash is underway in many countries. In the United States, those rejecting further globalization have gained considerable ground. Fast-track trade negotiating authority has been stalled since 1994, preventing active US participation in most new liberalization initiatives. An international negotiation to reduce barriers to foreign investment collapsed in 1998. The congressional vote on permanent normal trade relations for China in 2000 was highly contentious and closely contested. Serious opposition was demonstrated during the 1999 WTO ministerial conference in Seattle and the 2000 IMF/World Bank meetings in Washington. A common characterization of this backlash is that liberalization of trade, increased foreign investment, and rising immigration are opposed by small interest groups with agendas that are not directly related to the economics of the phenomenon. Globalization and the Perceptions of American Workers analyzes numerous opinion polls and other empirical material and shows that this characterization is largely wrong. The study reveals that the globalization backlash resonates with widespread skepticism among US citizens and that the public-like Congressis evenly split over the phenomenon. The authors base their conclusions on three key findings:
Based on this analysis, the study offers two policy implications:
Concerns about the impact of globalization on the environment, human rights, and other issues are also important elements of the politics of globalization. Scheve and Slaughter demonstrate, however, that worker perceptions about globalization appear to be in accord with the labor-market pressures from the phenomenon. It is this connection between policy liberalization, worker interests, and individual opinions that seems to form the foundation for the US public's skepticism about further trade liberalization at this point in time.
This new study is the first release from the Institute's Globalization Balance Sheet project. The project, under which half a dozen additional studies are underway, seeks to improve understanding of the impact of globalization on the United States and to devise effective policy responses to it. The next release from the project will be Reemployment Experiences of Trade-Displaced Americans, a comprehensive study by Lori G. Kletzer of the impact of trade-induced job dislocation on American workers. The Institute has already published an Economic Policy Brief entitled "A Prescription to Relieve Worker Anxiety", coauthored by Dr. Kletzer and Robert E. Litan of the Brookings Institution, which describes the proposal for a new policy of wage insurance deriving from that study.