An Empirical Analysis of Trade-Related Redistribution and the Political Viability of Free Trade

Arbeitspapier

Even if free trade creates net welfare gains for a country as a whole, the associated distributional implications can undermine the political viability of free trade. We show that trade-related redistribution increases the political viability of free trade in the US. We do so by assessing the causal effect of expected redistribution associated with the US Trade Adjustment Assistance program on US Congressional voting behavior on eleven Free Trade Agreements (FTAs) between 2003 and 2011. We find that a one standard deviation increase in redistribution leads to more than a 3% point increase in the probability of voting in favor of an FTA for the median representative. In addition, a one standard deviation decrease in redistribution across the entire US would have precluded passage of two of the eleven FTAs in our sample.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 8086

Classification and Topics

• Classification: Wirtschaft ; Trade Policy; International Trade Organizations ; National Government Expenditures and Related Policies: General ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: free trade agreements ; trade adjustment assistance ; political economy ; redistribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lake, James ; Millimet, Daniel L.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/96695
• Last update: 10.03.2025, 11:44 AM CET