The Effectiveness of Trade Adjustment Assistance Programs on Political Trust in the US and the EU
P5-S110-5
Presented by: Søren Etzerodt
Political trust is an important factor in predicting policy preferences and outcomes. Studies have shown a positive link between political trust and support for free trade and liberalism. This paper examines the effectiveness of trade adjustment assistance programs in increasing political trust. We compare the European Globalisation Adjustment Fund (EGF) in the European Union (EU), with the Trade Adjustment Assistance (TAA) program in the United States, the former of which mimics the TAA but primarily targets compensation at the firm rather than the individual level. We argue that trade adjustment assistance programs are more effective at improving political trust when assistance is not politically influenced. Leveraging survey data from EU28 countries and the US combined with geolocated data on trade adjustment assistance, we find that people in EU regions receiving assistance tend to trust the EU more. Conversely, we find no effect on political trust in TAA-compensated US regions. Addressing causality we leverage a staggered difference-in-differences design with new panel data at the municipality level from Denmark. We find that trade adjustment assistance is increasing preferences for the EU in the short to medium term. Our findings suggest that political trust can serve as an alternative measure of trade policy effectiveness.
Keywords: International Trade, United States, European Union, Liberalism, Political Trust