| This study analyzes the effectiveness of the 1974 Trade Adjustment Assistance (TAA) Program in Michigan in terms of efficiency and equity. It focuses primarily on the consequences of the benefits received by trade-impacted workers in the non-automotive manufacturing and mining sectors. The study covers the timeframe from late 1975 through early 1980.;A comparison was made of TAA and UI (state unemployment insurance) recipients on a range of demographic and occupational characteristics (including pre- and post-layoff). A regression model was specified to isolate the effects of TAA benefits on the length of the unemployment duration and the amount of hourly wages in the post-unemployment job.;In terms of efficiency, the findings confirm the disincentive effects of the TAA Program cited in the empirical literature. On average, the TAA sample remained out of work 62 percent longer than the UI sample. The findings related to post-unemployment wages are mixed. Some TAA recipients earned less in the post-unemployment job than UI recipients. Major earnings losses occurred in mining and steel. In contrast, TAA workers in manufacturing, excluding steel, found higher paying jobs. When controlling for other factors, however, little evidence exists that longer unemployment duration had a significant impact on acquiring better paying jobs.;In terms of equity, the analysis established significant differences between two subgroupings: men and women, and workers on temporary layoff and permanent displacement. On average, TAA females were older and had greater job experience with the same firm than all other workers in the study sample. TAA and UI females earned substantially less than men before and after layoff. When compared to UI women, however, TAA women secured better paying jobs after layoff while UI women lost earning power. The regression analysis established that permanently displaced TAA workers suffered substantial financial loss compared to TAA workers on temporary layoff. They also experienced earnings declines relative to permanently laid-off UI workers. |
