The outcome of the UK’s referendum on EU membership came as a shock to most academic and policy experts. This column uses an extensive da...
Global Competition and Brexit
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SSRN Electronic Journal
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- Brexit; Globalization; Economic Vote
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You might think that two years after the EU referendum, there would be nothing more to say about what caused the Leave vote. In fact,
Using disaggregated referendum returns and individual-level data, we show that support for the Leave option in the referendum regarding European Union membership of the United Kingdom was systematically higher in regions hit harder by economic globalization. We focus on the shock of surging imports from China over the past three decades. An instrumental variables approach supports a causal interpretation. We claim that this effect is driven by the displacement determined by globalization in the absence of effective compensation of its losers. On the other hand, neither stocks nor inflows of immigrants in a region are associated with support for the Leave option. The analysis of individual data from the British Election Study shows that attitudes towards immigration are strongly correlated with vote choice. Yet, attitudes about immigration are more closely related to the import shock than to the actual incidence of immigration in a region.