Who Supports Compensation? Embedded Liberalism and Preferences over Trade-Related Unemployment Insurance
31 Pages Posted: 10 Dec 2008
Date Written: December 10, 2008
The political economy of trade literature argues that the policy of compensating those who lose from trade is an important component of maintaining public support for free trade, a linkage known as the embedded liberalism thesis. This article tests the causal mechanisms underlying embedded liberalism by examining support for trade-related compensation using survey data from the United States. The results show mixed support for embedded liberalism: while those who expect to be harmed by trade support compensation, as expected, those who expect to gain do not. Further, the expected effect of trade strongly predicts support for trade-related unemployment insurance but has no influence on support for general unemployment insurance.
Keywords: Trade Policy, Unemployment Insurance, Embedded Liberalism, Compensation Hypothesis, Public Opinion
JEL Classification: F1, J65
Suggested Citation: Suggested Citation