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

James Lake and Daniel Millimet

No 8086, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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.

Keywords: political economy; trade adjustment assistance; free trade agreements; redistribution (search for similar items in EconPapers)
JEL-codes: F13 H50 J65 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2014-03
New Economics Papers: this item is included in nep-cdm, nep-int and nep-pol
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Citations: View citations in EconPapers (5)

Published - published in: Journal of International Economics, 2016, 99, 156-178

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Related works:
Journal Article: An empirical analysis of trade-related redistribution and the political viability of free trade (2016)
Working Paper: An Empirical Analysis of Trade-Related Redistribution and the Political Viability of Free Trade (2015)
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