Ernesto Ugolini*, Wilma Ticona Huanca**
IBD Salle 11
AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille
Philippine Escudié: philippine.escudie[at]univ-amu.fr
Lucie Giorgi: lucie.giorgi[at]univ-amu.fr
Kla Kouadio: kla.kouadio[at]univ-amu.fr
Lola Soubeyrand: lola.soubeyrand[at]univ-amu.fr
*This paper examines how democracy and trade integration influence support for globalization. It investigates the role of democratic processes, particularly income redistribution, in shaping the after-tax effects of trade shocks on support for globalization. I develop a model in which voters choose between protectionist and liberal parties based on their after-tax income. While trade protection can increase pre-tax income for those negatively affected by trade, it reduces overall income and the tax base. The model predicts that the impact of trade-induced income inequality on protectionist voting is moderated by the strength of democratic institutions and their influence over tax policy. To test this, I construct a panel dataset of 66 democracies from 1950 to 2020, combining data on trade integration, countries' skill levels, vote shares, and democracy scores. Utilizing improvements in air transportation relative to sea as an instrument for trade integration, the results show that trade shocks with low-skilled partners affect protectionist vote shares differently based on a country’s democracy score: in strong democracies, trade with low-skilled partners increases protectionist voting, while in weak democracies, it decreases. This effect is driven by both exports to and imports from low-skilled trade partners. Additionally, trade enhances support for redistributive and protectionist parties, especially in weak democracies. These findings are further validated by district-level analyses within 14 EU countries.
**We derive an OLG model to study the effect of demographic transition and aggregate productivity growth slowdown on structural changes in employment in agriculture in European countries. The demographic transition in the model is associated with a significant fall in mortality probabilities, especially in old age, a fall in population growth, and a fall in labor productivity. Overall, together with the productivity growth slow down, it implies an increase in the savings rate and a fall in the interest rate. The higher savings and investments directly affect the employment share in agriculture because the agricultural sector has higher capital intensity and capital-labor substitutability than the rest of the economy. We show that the demographic transition alone can account for about 15 percent of the observed fall in agricultural employment in the 1970-2020 period. Together with the TFP growth slowdown, it can account for about 35 percent of the observed fall in agricultural employment.