Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/262697 
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 295
Publisher: 
University of Chicago Booth School of Business, Stigler Center for the Study of the Economy and the State, Chicago, IL
Abstract: 
Commercial policies are often only efficient insofar as those harmed can be compensated. In practice, compensatory measures fall far short of distributive harm. We rationalize the paucity of compensation as a strategic effort on the part of elected officials to withhold information about effects of their policy initiatives. We develop a formal model in which citizens must infer the effects of a policy initiative as well as the politician's commitments from the choice to offer compensation. We find that committed policymakers under-provide compensation to avoid electoral backlash. Using microdata from the US Trade Adjustment Assistance program, we replicate a research design that uses exogenous allocation of petitions for assistance across bureaucrats for causal identification. We find that a ten percent increase in the TAA certification rate decreases support for Democratic candidates by 1:75% in areas hard hit by import-competition. This electoral effect incentivizes pro-distributive politicians to under-provide economic assistance.
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.