International Trade and Worker Displacement: Evaluation of the Trade Adjustment Assistance Program

Abstract

The Trade Adjustment Assistance (TAA) program offers unemployment compensation and re-employment adjustment services to workers who lose their jobs due to increased import competition. In 1981 and again in 1988, the program rules were changed to shift the emphasis from compensation to training. This paper examines the pre-layoff characteristics and post-layoff labor market experience of two nationally representative samples of TAA program participants, one of which participated in the program just before the 1988 amendments and the other just after. The authors find that the TAA program was well targeted during the time period studied: it served workers who were permanently displaced from their jobs and who experienced significant earnings losses due to their layoff. They find no evidence, however, tha training had a substantial positive impact on earnings of TAA trainees, at least in the first three years after their initial unemployment insurance claim.