Trade liberalization and the politics of trade adjustment assistance

For more than 35 years the United States has offered assistance to workers displaced as a result of freer trade. The rationale lies in the welfare economics argument for compensation of those who lose from a shift in policy to meet broader social interests. The programme has failed to compensate fully for adjustment costs, of course, and the originally enthusiastic support of workers has given way to scepticism. Politics lie at the heart of the programme's origins, and institutional inertia is key to its longevity, the author argues.