EXAMINING THE TRADE ADJUSTMENT ASSISTANCE FOR FARMERS IN THE U.S.: ROLE OF INFORMATION AND INCENTIVES IN PROGRAM PARTICIPATION

Abstract

The Trade Adjustment Assistance (TAA) program for farmers was established in 2002 to assist farmers adversely affected by import surges. Since its introduction, the program has been mostly underused by farmers, and the American Recovery and Reinvestment Act (ARRA) in 2009 eased the program rules to drive more participation of farmers. Based on the decision-making model and the uniquely constructed panel data set, we find that farmers’ incentive to make up for the losses in other types of direct government payments as well as eligibility criteria explain farmers’ participation in the TAA program. Less time and efforts needed for participation, proxied by previously approved cases of the same or similar commodities, also seems to drive farmers’ participation. Results also confirm that the ARRA of 2009 was effective in increasing farmers’ participation.