Globalization's Concentrated Costs (and Benefits): Import Competition, Globally Engaged Firms, and U.S. Presidential Voting 1

We study how integration in the global economy influences U.S. presidential elections. National-level (“macro”) voting studies of presidential elections have shown large effects of economic variables on incumbent party vote shares. We extend this work to consider the effects of trade, showing for the first time that increasing imports negatively affect incumbent vote share and increasing exports are associated in increasing vote shares for incumbents. The estimated effects are large and politically consequential. However, macro studies are unable – owing to data limitations – to discriminate among the competing costs and benefits of increased integration in the global economy. To shed new light, we consider the subnational (county-level) distribution of economic activity in the United States to better identify the winners and losers from globalization. We argue that increases in trade and investment principally benefit the employees of the largest and most productive firms that engage in these activities, while employees of firms that compete with imports may be dissatisfied with economic integration that increases competition from abroad. We therefore expect that voting will reflect the spatial distribution of economic activity among firms that win and lose from increased trade. We examine this proposition using Census data on the universe of U.S. firms to construct measures of internationally engaged employment, which we link to U.S. presidential vote share at the county-level. Our results indicate increases (decreases) in incumbent vote shares in counties characterized by the concentration of high-skilled (low-skilled) tradable goods and services. We also find the increasing volatility of employment adversely affects incumbent vote shares.