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Policy and Politics: Trade Adjustment Assistance in the Crossfire

Author

Listed:
  • Lainez, Christopher

    (School of Economics Drexel University)

  • Matschke, Xenia

    (University of Trier)

  • Yotov, Yoto

    (School of Economics Drexel University)

Abstract

The United States introduced Federal Trade Adjustment Assistance (TAA) as part of the 1962 Trade Expansion Act to dampen the adverse impact of increased trade on workers. Applications to receive TAA require approval from the Department of Labor. Guided by the technical criteria used by the U.S. government in the official TAA certification process, we capitalize on a rich multi-dimensional panel dataset to quantify the effects of political influence on the TAA certification decision. We find that political factors such as party affiliation of the President, voting outcomes at the state level, and whether a petition was certified in an election year influence the TAA certification outcome. Those effects remain even when including a wide array of controls and a rich set of fixed effects.

Suggested Citation

  • Lainez, Christopher & Matschke, Xenia & Yotov, Yoto, 2016. "Policy and Politics: Trade Adjustment Assistance in the Crossfire," School of Economics Working Paper Series 2016-5, LeBow College of Business, Drexel University.
    • Handle: RePEc:ris:drxlwp:2016_005
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    More about this item

    Keywords

    trade adjustment assistance; political economy; trade protection;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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