Globalization, robotization, and electoral outcomes: Evidence from spatial regressions for Italy

Abstract

Criticism of economic globalization and technological progress has gained support in Italy in the last two decades. However, due to the differentiated exposure of local labor markets to this process, electoral outcomes have varied considerably across the country. By observing the local impact of three global economic phenomena (flows of migrants, foreign competition in international trade, and diffusion of robots) alongside with the patterns of local electoral outcomes potentially associated with discontent, this study analyzes the economic forces driving the evolution of general elections in 2001, 2008, and 2013 in Italy. The analysis reveals that all these global factors had an impact on political outcomes associated with discontent, albeit in different ways and changing over time. All three factors are associated with increases in votes for far‐right parties in the period 2001–2008, but only robotization continues to have such an impact in the following period, while immigration is associated with an increase in votes for the Five‐Star Movement at the expense of far‐right parties. The results and extensions exploiting recent advances in political geography, political economy, and spatial econometrics make it possible to draw some general and methodological conclusions. Global drivers interact with elements pertaining to the political supply that empirical researchers should not be oblivious about. Political spillovers across neighboring areas add to the direct impact of locally mediated economic factors. Finally, the adoption of shift–share instrumental variables to identify the impact of robotization may lack robustness.

The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

“…In particular, we assume that scientists differ in the cost of effort: when working in automation, scientist j incurs a cost of χ I j Y(t) , and when working in the creation of new tasks, she incurs a cost of χ N j Y(t) . 26 Consequently, scientist j will work…”

“…. 26 The cost of effort is multiplied by Y(t) to capture the income effect on the costs of effort in a tractable manner. 27 This expression follows because the demand for intermediates is The take-it-or-leave-it nature of offers implies that a firm that automates task I needs to compensate the existing technology monopolist by paying her the present discounted value of the profits that her inferior labor-intensive technology would generate if not replaced.…”

“…This assumption is intuitive and reasonable: since intermediates embody the technology that directly works with labor or capital, they should be highly complementary with the relevant factor of production in the production of tasks. 29 The expressions for the value functions, V I (t) and V N (t) in equations (25) and (26) are intuitive. The value of developing new automation technologies depends on the gap between the cost of producing with labor (given by the effective wage, w(τ) ) and the rental rate of capital (recall that ˆ σ > ζ ).…”

“…In this case, the present discounted values from innovation are negative. 30 There is an important difference between the value functions in (25) and (26) and those in models of directed technological change building on factor-augmenting technologies (such as in Acemoglu 1998Acemoglu , 2002. In the latter case, the direction of technological change is determined by the interplay of a market size effect favoring the more abundant factor and a price effect favoring the cheaper factor.…”

“…• And the value functions that determine the allocation of scientists, V I (t ) and V N (t ) , are given by (25) and (26).…”