Worker Adjustment Policies: An Alternative To Protectionism

The issues which confront government in developed countries like Canada concerning the choice between trade or protection are related to concerns in three distinct, yet inter-connected areas, namely: international development, national industrial development, and political exigencies and repercussions. The theoretical economics literature, as well as most policy analysis, tends to approach each of these issues in a different manner and often tend to ignore the essential interrelationships among them. As a result, policies which provide an optimal, combined solution to all three policy concerns tend to be overlooked or dismissed. This appears to be the case with worker adjustment assistance. The purposes of this paper are to indicate the potential usefulness of properly designed worker adjustment policies, to define the measurement and empirical issues which must be addressed in designing specific programs, and to point out critical considerations regarding their implementation. Estimates of the government financial assistance required for worker adjustment assistance are provided for one region in Canada in order to illustrate the magnitudes involved.