Global Competition and Brexit

Citation data:

SSRN Electronic Journal

Publication Year:
2016
Usage 5127
Abstract Views 3874
Downloads 1253
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SSRN
SSRN Id:
2870313
DOI:
10.2139/ssrn.2870313
Author(s):
Colantone, Italo ; Stanig, Piero
Publisher(s):
Elsevier BV
Tags:
Brexit; Globalization; Economic Vote
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article description
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.