Trade Competition and Worker Compensation: Why Do Some Receive More than Others?

31 Pages Posted: 19 Nov 2019 Last revised: 14 Sep 2020

See all articles by Sung Eun Kim

Sung Eun Kim

Korea University

Krzysztof Pelc

University of Oxford; Korea University; McGill University

Date Written: September 8, 2020

Abstract

Dealing with the distributional consequences of trade liberalization has become one of the key challenges facing developed democracies. Governments have created compensation programs to ease labor market adjustment, but these resources tend to be distributed highly unevenly. What accounts for the variation? Looking at the largest trade adjustment program in existence, the US' Trade Adjustment Assistance (TAA), we argue that petitions for compensation are largely driven by legislative attitudes. When legislators express negative views of TAA, individuals in their districts become less likely to petition for, and receive, compensation. This effect is especially pronounced in Republican districts. An underprovision of TAA, in turn, renders individuals more likely to demand other forms of government support, like in-kind medical benefits. We use roll-call votes, bill sponsorships, and floor speeches to measure elite attitudes, and we proxy for the demand for trade adjustment using economic shocks from Chinese import competition. In sum, we show how the individual beliefs of political elites can be self-fulfilling.

Keywords: Trade Adjustment, China Shock, TAA, Legislative Attitudes, US Congress

Suggested Citation

Kim, Sung Eun and Pelc, Krzysztof, Trade Competition and Worker Compensation: Why Do Some Receive More than Others? (September 8, 2020). Available at SSRN: https://ssrn.com/abstract=3483249 or http://dx.doi.org/10.2139/ssrn.3483249

Sung Eun Kim

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

Krzysztof Pelc (Contact Author)

University of Oxford ( email )

Department of Politics and International Relations
Manor Road Building
Oxford, OX2 6LE

HOME PAGE: http://https://www.politics.ox.ac.uk/person/krzysztof-pelc

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

McGill University ( email )

855 Sherbrooke St. W
Montreal, Quebec H3A 2T7
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
119
Abstract Views
1,192
Rank
481,166
PlumX Metrics