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Does trade adjustment assistance make a difference? [TAA versus no TAA] (Reynolds & Palatucci 2012)

Absence of conflict of interest.

Citation

Reynolds, K. M., & Palatucci, J. S. (2012). Does trade adjustment assistance make a difference? Contemporary Economic Policy, 30(1), 43-59. [TAA versus no TAA]

Highlights

  • The study’s objective was to examine the impact of Trade Adjustment Assistance (TAA) on the employment and earnings of displaced manufacturing workers. The authors investigated similar research questions in another study, examining the impact of TAA services including training relative to TAA services not including training, the profile of which is available [here].
  • The study uses a nonexperimental design to compare the outcomes of workers displaced from manufacturing jobs from 2003 to 2005 who received services through TAA with the outcomes of a comparison group of workers displaced during the same period who likely did not receive assistance. The authors collected data on the treatment and comparison groups from different sources. Data for program participants were based on U.S. Department of Labor Trade Act Participant reports. Data for the comparison group were based on the Displaced Worker Survey from the Current Population Survey.
  • The study did not find statistically significant relationships between receiving TAA and the employment or earnings of participants compared with those who did not receive assistance from the program.
  • The quality of causal evidence provided in this study is low because the study uses a nonexperimental design, and the authors did not demonstrate that the groups being compared were similar before the intervention. This means we are not confident that the estimated effects are attributable to TAA; other factors are likely to have contributed.

Intervention Examined

Trade Adjustment Assistance (TAA)-Funded Training

Features of the Intervention

TAA is a federal program that provides occupational training and job search assistance for displaced workers. Participants also have access to supportive services including financial assistance, a health coverage tax credit, and relocation assistance to pursue employment in areas with greater employment opportunities. Participants must have completed or be enrolled in training or have received a waiver from training because they are nearing retirement, have poor health, or already have marketable skills to receive financial assistance (26 additional weeks of unemployment insurance). To be eligible for assistance, workers must have been employed by a company that was certified by the U.S. Department of Labor as having been negatively impacted by trade activity, including production losses because of increased imports.

Features of the Study

The authors used statistical models to compare the employment and earnings outcomes of a treatment group that received TAA services with outcomes of a matched comparison group that likely did not. The authors selected the comparison group using a statistical procedure (propensity score matching) that matched comparison group members to treatment group members based on age, education, job tenure, state, year, and industry characteristics. People in both groups had been displaced from a manufacturing job from 2003 to 2005.

Data for program participants were drawn from U.S. Department of Labor Trade Act Participant reports. Data for the comparison group were drawn from the Displaced Worker Survey from the Current Population Survey. The sample includes 5,125 TAA participants and 469 nonparticipants. The treatment group is about 56 percent male with average age of about 47; members of the treatment group had an average of 9.5 years of tenure at the job from which they were displaced. The comparison group is about 63 percent male with average age of about 45; members of the comparison group had an average of 8.8 years of tenure at the job from which they were displaced.

Findings

Employment

  • The study did not find a statistically significant relationship between receiving TAA and the employment of participants when compared with displaced manufacturing workers not receiving assistance from the program.

Earnings and wages

  • The study did not find a statistically significant relationship between receiving TAA and the earnings of participants when compared with displaced manufacturing workers not receiving assistance from the program.

Considerations for Interpreting the Findings

The authors did not account for existing differences between the groups before participation in TAA. These existing differences between the groups—and not the intervention—could explain the observed differences in outcomes.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the study uses a nonexperimental design, and the authors did not ensure that the groups being compared were similar before the intervention. This means we are not confident that the estimated effects are attributable to TAA; other factors are likely to have contributed.

Additional Sources

Reynolds, K., & Palatucci, J. (2008). Does trade adjustment assistance make a difference? Unpublished manuscript.

Reviewed by CLEAR

January 2020