How responsive is Trade Adjustment Assistance?

Sung Eun Kim, Krzysztof Pelc

Research output: Contribution to journalArticlepeer-review

Abstract

How responsive is the US' Trade Adjustment Assistance (TAA) to the labor dislocation that results from trade integration? Recent findings suggest that the world's most ambitious trade adjustment program barely responds to import shocks, and that the shortfall is made up by disability insurance and early retirement. This holds considerable implications: TAA offers a lens onto the central question of whether developed democracies can effectively redistribute the gains from international economic integration. We take a closer look at these results. Using petition-level data over a 20-year period, we find that TAA is between 1.7 and 3.3 times more responsive than current estimates suggest. Yet the news is not all good. As we show, the responsiveness of TAA has decreased considerably since the 1990s, just as developed democracies started facing increasing pushback against liberalization. This shortfall, in turn, has political consequences: areas where TAA has been least responsive were also more likely to shift toward voting for Trump in the 2016 Presidential election. Our findings speak to the considerable challenge governments face in aiding workers left behind by liberalization.

Original languageEnglish
Pages (from-to)889-898
Number of pages10
JournalPolitical Science Research and Methods
Volume9
Issue number4
DOIs
Publication statusPublished - 2021 Oct 27

Keywords

  • Election
  • International Political Economy
  • Trade Adjustment Assistance
  • Trade Compensation

ASJC Scopus subject areas

  • Sociology and Political Science
  • Political Science and International Relations

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