Globalization, Impatience, and Up-Front Redistribution

Category: Quantitative Economic Policy Seminar
When: 24 October 2019
, 16:15
 - 17:45
Where: RuW 4.202

Societies see growing support for politicians who advocate an end to globalization. Our theory links impatience in the form of present-biased preferences to voters’ appraisals of a positive income shock due to globalization that brings about short-run costs and delayed gains. We show that impatient individuals may refuse further globalization, if they are subject to borrowing constraints. Using German data, we indeed find that impatient people support right-wing populist parties. We also confirm this result for the United Kingdom and show that a preference for immediate gratification increases the support for Brexit. A government that seeks to ensure support for further globalization may use up-front redistribution to resolve this issue.