2004), “Do Labor Issues Matter in the Determinants of U.S. Trade Policy? An Empirical Reevaluation

Lobbyists for trade and other industrial poli-cies represent different interest groups in soci-ety. In particular, distinguishing between labor and capital lobbies is common. Labor interests, usually represented by trade unions, often lobby for trade protection. For example, U.S. trade unions strongly opposed the North American Free Trade Agreement (NAFTA) in the 1990s because of fears that freer trade would decrease domestic employment and wage levels. Further, according to Robert E. Baldwin (1985) and Baldwin and Christopher S. Magee (2000), trade union contributions are positively corre-lated with the probability that a U.S. congress-man votes against trade liberalization. The “protection-for-sale ” model of Gene M. Grossman and Elhanan Helpman (1994) (GH model), however, suggests that very few fac-tors—none of them labor-related—determine trade protection. In the protection-for-sale model, wages are fixed and equal across indus-tries, and there is full employment. Only capital owners are allowed to lobby for trade policy, but even if workers, too, were allowed to lobby, they would want import subsidies in order to benefit from lower product prices. Hence, the GH model cannot explain why trade unions lobby for trade protection to secure higher wage and employment levels. The GH model is also at odds with the older empirical trade protection literature (Dani Ro-drik, 1995, provides an overview), which finds that labor market considerations are an impor-tant trade policy determinant. However, more-recent empirical studies (for example, Pinelop