Reforming Trade Adjustment and Unemployment Assistance

Matthew Slaughter and Robert Lawrence have an interesting little proposal in the NY Times: abolishing Trade Adjustment Assistance (TAA), rolling it into unemployment insurance, and reforming the program so as to reduce its work disincentives. They also advocate special tax treatment for unemployed workers’ expenditures on job retraining. They sell the plan, which they say will cost about $20 billion, as a way of building public support for trade agreements, which has dissipated in recent years.

On the whole, the reforms make sense to me. Nevertheless, they are still just tinkering. I am not sure that these relatively arcane changes will be enough to change the public’s fundamentally hostile attitudes toward globalization these days, and I think we need to consider far more radical reforms to achieve rapid reductions in unemployment.

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