DP2595 Who is Afraid of Globalization? The Challenge of Domestic Adjustment in Europe and America

Author(s): André Sapir
Publication Date: October 2000
Keyword(s): International Migration, Labour Adjustment, Trade Liberalization
JEL(s): F02, F13, F22, J60
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2595

The paper examines why ?globaphobia? seems to be more prevalent among labour in the United States than in Europe. It argues that globalization has generated more wealth, but also more income inequality and adjustment problems, in America than in Europe. In the United States, the median voter has lost wages and experienced rising job insecurity due to globalization. By contrast, in Europe, the welfare state has largely insulated the median voter from the pains of globalization. The paper also examines international labour mobility, the grand absentee of the current wave of globalization. Here it finds that phobia runs higher in Europe than in America. It claims that the relative generosity of Europe?s welfare state makes it less open to migration than the United States.