The Gilded Wage: Profit-Sharing Institutions and the Political Economy of Trade

Scholars of international political economy often argue that workers automatically share the same trade policy preferences as their employers. However, this approach assumes that trade policies that increase profits necessarily lead to increases in wages. In contrast, I argue that capital and labor are more likely to share the same trade policy preference when profit-sharing institutions permit capital to credibly commit that an increase in profits will lead to an increase in wages. In support of my argument, I present a structured, focused comparison of the American textile and steel workers' unions during the late nineteenth century. Both unions supported the high tariffs that protected their industries when credible profit-sharing institutions were in place, but did not support high tariffs when such institutions were absent.