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How responsive is Trade Adjustment Assistance?

Published online by Cambridge University Press:  27 October 2020

Sung Eun Kim Open the ORCID record for Sung Eun Kim [Opens in a new window]  and
Krzysztof Pelc
Sung Eun Kim*
Affiliation:
Political Science and International Relations, Korea University, Seongbuk-gu, Seoul, Korea (the Republic of)
Krzysztof Pelc
Affiliation:
Political Science, McGill University, Montreal, Quebec, Canada
*
*Corresponding author. Email: [email protected]
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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.

Keywords

International Political EconomyTrade Adjustment AssistanceTrade CompensationElection
Type
Research Note
Information
Political Science Research and Methods , Volume 9 , Issue 4 , October 2021 , pp. 889 - 898
Copyright
Copyright © The Author(s), 2020. Published by Cambridge University Press on behalf of the European Political Science Association

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