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Trade Adjustment Assistance: Welfare and Incentive Effects of Payments to Displaced Workers

Year: 1989

Type: report

Abstract: Ye analyze the welfare effects of conditional trade adjustment assistance (i.e. assistance that is received only if displaced workers remain unemployed), and compare the conditional program with unconditional assistance. Taking the level of assistance as exogenous, we show that either the conditional or unconditional program may impose greater efficiency costs, depending on underlying parameters. We then introduce an explicit social welfare function and solve for the optimal level of assistance for each program. Finally, we compare the optimized values of the two programs. If the distribution of wage offers is uniform, the unconditional program is welfare superior.

Source: National Bureau of Economic Research

DOI: 10.3386/w3071

Authors: James Brander, Barbara Spencer

Institutions: University of British Columbia, National Bureau of Economic Research

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Reduced inequalities

Open Access status: green

OpenAlex ID: W1577884171

Cites:

Cited by: 46

Related to: 10