Trade Adjustment Assistance under the U.S. Trade Act of 1974: An Analytical Examination and Worker Survey

The goals of trade adjustment assistance (TAA) are to ease transition, compensate injury, and bleed political pressure for protectionism. Section I of the paper outlines the economic principles underlying these goals, and their shifting historical importance in the U.S. Sections II and III of the paper discuss the personal characteristics of a representative sample of worker recipients of TAA in 1976, and their labor market success in several subsequent years. Their experience is compared to that of a matched sample of workers receiving standard unemployment insurance (UI) . Comparisons in Section II focus on differences in mean characteristics and experience between the TAA and UT samples, controlling only for whether workers returned eventually to the firm from which they were initially separated. Comparisons in Section III focus on differences between the TAA and UI samples in their ability to recover lost employment and income, using a regression approach that in principle controls for all relevant variables, and not for just one. The most important conclusions of the research are the following. (1) The majority of TAA recipients in 1976 were not permanently displaced, but returned eventually to their former employers. A far greater proportion of UI recipients suffered permanent displacement. (2) Workers receiving TAA had higher incomes on average than their counterparts who received only UI. Their incomes furthermore fell less frequently below the poverty line. (3) TAA recipients nevertheless experienced more frequent and enduring transitional unemployment than did UI recipients, and did not return to their former income level as rapidly. (4) The reasons for conclusion (3) were unclear. It could not readily be explained by differences between the TAA and UI samples in permanence of layoff, generosity of program benefits, age, experience, industry, affluence, economic environment, socioeconomic status, or behavioral responses to any of these variables. Conclusions (1) and (2) are at variance with most previous work on TAA. Conclusion (3) is not, but the traditional explanations for it are those that conclusion (4) rules out.

Exchange Rates and U.S. Auto Competitiveness

This paper develops unique disaggregated data for three U.S. automakers and three Japanese to assess how changes in exchange rates, factor costs, and voluntary export restraints have affected recent price competitiveness in the U.S. passenger car market. We find support for several familiar relationships. The support provided by the experience of the late 1970s is straightforward. The dollar's foreign- exchange value fell below its historical trend, in both nominal and cost- adjusted (real) terms, relative to the major suppliers of U.S. auto imports. U.S. price competitiveness tracked U.S. cost competitiveness quite closely, as average prices of U.S. automakers rose more slowly than those of their principal rival firms (all Japanese). "Misalignment" of the dollar toward weakness by historical norms was reflected in competitive relative pricing by U.S. auto firms, again with respect to a historical norm. The support provided by the experience of the years 1980-1985 is more complex and interesting. Strong offsetting forces appear to have been at work. Relative to major auto suppliers, the effective nominal dollar rose gradually toward its level of the mid-1970s, but the effective real "auto dollar" rose much faster, increasing to a level well above its historical norm by early 1985. U.S. cost competitiveness deteriorated not so much because of exchange rates, but because unit labor costs in manufacturing rose in the U.S. relative to those in major auto suppliers. U.S. auto price competitiveness began to deteriorate correspondingly, but soon stopped, and instead improved gradually between 1982 and 1985, ending up at about the same level in 1985 as in 1980. The Voluntary Restraint Arrangements (VRAs) with Japan, which began in 1981, seem to be the explanation for why the negative effects of exchange rates and costs on U.S. auto price competitiveness were offset. The VRAs are also a reason why average prices of U.S. automakers rose faster than other U.S. prices as measured by the consumer price index, and why in Japan, average prices on auto sales to the U.S. rose much faster than other Japanese prices. In sum, "misalignment" of the dollar toward strength by historical norms and deteriorating labor cost competitiveness, which tended to undermine the competitiveness of U.S. auto firms, were offset by the Japanese VRAs, which buttressed it. The VRAs, however, undermined the inter-sectoral competitiveness of autos.

The WTO and market-supportive regulation: a way forward on new competition, technological and labor issues

World Trade Organization

Revealing Comparative Advantage: Chaotic or Coherent Patterns Across Time and Sector and U.S. Trading Partner?

We map United States comparative advantage between 1980 and 1995, by trading partner and region, using Balassa's export-based index of Revealed Comparative Advantage (RCA). We find: temporally stable and ubiquitous US comparative advantage in differentiated producer goods (except disadvantage in Japan); somewhat less stable and less sweeping US disadvantage in standardized producer goods; chaotic and diverse patterns of US RCA in consumer goods (especially in the Chinese market). Our most significant findings are surprisingly sharp geographical differences in patterns of US RCA and surprisingly small differences across sub-sectors of 1, 2, and 3-digit SITC classifications - regional, but not sectoral, niche' specialization. The high overall variability across regions in RCA indexes seems unrelated to obvious explanations such as proximity or lingual/historical ties to the US. In producer goods, RCA variability across regions correlates somewhat better with accounts of trade diversion and of regional preferences for and discrimination against US exports. We find only scant evidence of high or increasing variability across disaggregated commodity sub-groups in US RCA indexes. Such variability is often the prediction of theories of comparative advantage that are based on vertical specialization, product differentiation, or scale and agglomeration economies.

Optical properties of a low-loss polarization maintaining microfiber

A polarization preserving single-mode microfiber was successfully fabricated by a flame brushing method. A polarization extinction ratio of 16dB is typically maintained through the device with excess loss of 0.2dB