Trade And Welfare

Topics: Unemployment, International trade, Free trade Pages: 28 (10981 words) Published: January 25, 2015
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International Interactions: Empirical and
Theoretical Research in International
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Trade and Welfare Compensation: The
Missing Links



Eunyoung Ha , Dong-Wook Lee & Puspa Amri

Claremont Graduate University
Accepted author version posted online: 30 Apr 2014.Published online: 09 Sep 2014.

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To cite this article: Eunyoung Ha, Dong-Wook Lee & Puspa Amri (2014) Trade and Welfare Compensation: The Missing Links, International Interactions: Empirical and Theoretical Research in International Relations, 40:5, 631-656, DOI: 10.1080/03050629.2014.896799 To link to this article:

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International Interactions, 40:631–656, 2014
Copyright © Taylor & Francis Group, LLC
ISSN: 0305-0629 print/1547-7444 online
DOI: 10.1080/03050629.2014.896799

Trade and Welfare Compensation:
The Missing Links

Downloaded by [Nazarbayev University Library] at 07:21 25 January 2015

Claremont Graduate University

This study uses theory from embedded liberalism to reorient the debate over efficiency versus compensation in the trade and welfare literature. We detail the causal mechanisms and provide empirical results that show how welfare spending can be a necessary condition to further trade liberalization. We argue that increases in welfare compensation lead to stronger public support for trade, which allows states to further advance along the path toward trade liberalization. Based on the 1995 and 2003 ISSP (International Social Survey Program) for 10 OECD countries, our multilevel statistical analyses (individual and country level) show that (1) workers in import-exposed sectors tend to strongly oppose trade, but this effect is substantially diminished when they receive unemployment compensation, and (2) public support for free trade is significantly associated with higher levels of trade openness. KEYWORDS spending, trade, welfare

National responses to trade liberalization have been studied extensively, and decades of scholarship have consistently produced two opposing arguments, what we will call the “efficiency” and the “compensation” arguments. The efficiency argument...

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