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TRADE ADJUSTMENT, POLITICAL PRESSURE, AND TRADE PROTECTION PATTERNS
Author(s) -
YOTOV YOTO V.
Publication year - 2013
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2012.00504.x
Subject(s) - grossman , economics , subsidy , unemployment , politics , government (linguistics) , commercial policy , value (mathematics) , government spending , trade barrier , international economics , free trade , international free trade agreement , international trade , macroeconomics , market economy , keynesian economics , political science , law , linguistics , philosophy , machine learning , computer science , welfare
This paper introduces trade adjustment considerations as active determinants of trade policy. Using novel U.S. data sets, I show that, despite their small monetary value, trade‐induced unemployment and trade‐adjustment costs can incite an incumbent politician to grant protection to an unorganized industry, even in the presence of political pressure by organized sectors. This finding complements the theoretical predictions from Grossman and Helpman (American Economic Review, 84, 1994, 833–50) who argue that the government should protect organized industries but should subsidize imports in unorganized sectors . ( JEL D73, F13, F14, F16, J68)