American Political Science Review Vol.105,No.1 impact on jobs.In the model,such a national time location that produces a specific product for a specific trend is captured in the constant term a in Equation company.Applications made to the TAA division are (1)];however,one cannot distinguish the specific na- then reviewed by investigative teams at the DOL and, tionwide effect of trade openness from other national if found to have merit,are granted a TAA certification trends that shifted the electorate's preferences.Given that provides the workers with eligibility to a range that the nationwide impact of trade-related job losses of benefits.16 If the petition is certified,then the cer- on support for the incumbent is probably not positive, tification covers all workers in the group regardless this analysis most likely provides a conservative esti- of whether their names appeared as claimants on the mate of the electoral effect of these job losses on the petition. nationwide vote TAA petitions include information about the name Third and finally,the analysis should not be seen as of the employer,the estimated number of affected estimating the fotal impact of trade openness on voting workers,the application and determination date,and It could be,for example,that a county that experienced the address of the workplace.17 In total,the dataset many trade-related job losses gained other jobs from I use for the 8-year period between 1996 and 2004 trade-related investments,perhaps leading to a net gain includes 22,287 applications representing 2,110,310 of jobs.Moreover,trade openness has an impact on the employees.18 Table 1 provides the key summary overall state of the economy (e.g.,by spurring growth), statistics19 which in turn also affects voters'preferences.The find- As noted,the key dependent variable of interest in ings of this analysis should therefore be interpreted as the analysis is the relative change in Bush's vote share capturing the electoral impact of one aspect of trade, between the 2000 and 2004 elections.I therefore cal- albeit a politically salient one,namely,the loss of local culate all trade-related job dislocations that occurred in the 4 years between the two elections based on the determination dates provided by the TAA.Within this DATA AND MEASUREMENT period,I classify the applications along two dimensions. The first dimension distinguishes between applications The analysis covers all 3.111 U.S.counties on which that the DOL certified for TAA benefits and those complete voting data are available.The counties of that were denied.The second dimension is the cause Alaska are excluded because its electoral wards do not that brought about the job dislocation:(1)offshoring match the county boundaries.The voting data comes of production,(2)import competition,and(3)indirect from the Congressional Quarterly's Voting and Elec- foreign competition.20 I then calculate the percentage tions Collection.Data on trade-related job losses are based on applications submitted to the TAA program in the DOL.Because the measure of trade-related job 6 These benefits include a"trade readjustment allowance"for up to losses is central to all subsequent analyses,this section 52 weeks after workers'unemployment compensation benefits are describes the TAA data in some detail. exhausted (provided during the period in which a worker is partic- ipating in an approved full-time training program).a 2-year"wage insurance"that covers 50%of the difference between workers'old Trade Adjustment and Assistance Data and new salaries,support for the costs associated with retraining for another job or career,and tax credits for health care costs covering The TAA program was established as part of the Trade up to 65%of the workers'monthly health insurance premium.The exact benefits have changed somewhat over the years. Expansion Act in 1962,with the objective of providing Approximately 15%of the applications in the DOL's archive had reemployment services and benefits to workers whose incomplete address information that did not provide ZIP code data. employment was hurt by America's trading relations. For these slightly more than 3,000 cases,I used the companies'Web By providing legislatures with a means to compensate sites and the U.S.Post Office Web site to locate the addresses and match the exact ZIP codes of the affected businesses.The informa- constituents hurt by the signing of new free trade agree- tion was then manually recorded. ments,the TAA was seen as a useful political tool for 18 The TAA division reports a slightly different set of figures.The fig- helping pass legislation geared toward trade liberaliza- ures reported here are obtained after aggregating data from the dif- tion.To be eligible for TAA benefits.a worker mus ferent TAA programs,eliminating duplicate entries and terminated receive certification by the DOL confirming that cer- applications,as well as applications that had missing data or that took tain requirements are met:(1)the worker's employer place in the same calendar year but occurred after the election date Note that the figure treats TAA applications made by different divi- produces an article;and(2)the workers applying have sions of the same "mother company"as separate petitions.See the been totally or partially laid off as a result of(a)import online Appendix at http://www.journals.cambridge.org/psr2011003 competition that led to decline in sales or production for a more detailed discussion of consolidating the TAA petitions (b)a shift in production to another country with which into the final dataset. the United States has a trade agreement,or (c)due to 19 Following the signing of NAFTA in December 1993,the DOL established an additional program(NAFTA-TAA)that operated in loss of business as an upstream supplier or downstream parallel to the general TAA program in order to deal specifically producer for another company that is TAA certified.15 with job dislocations caused by NAFTA.With the passing of the Each application,which requires at least three pe- 2002 Trade Act,the two programs were consolidated and continued titioners,refers to a group of workers at a specific to operate under the banner of the TAA program.The data used in the analysis include all applications made to the TAA and the NAFTA-TAA programs during the period 1996-2004. 15 As part of the "Recovery Act."these eligibility criteria were 20 The third category includes the job dislocations resulting from a loss of business of an upstream supplier or a downstream producer slightly altered in May 2009. for a TAA-certified company. 171
American Political Science Review Vol. 105, No. 1 impact on jobs. In the model, such a national time trend is captured in the constant term [α in Equation (1)]; however, one cannot distinguish the specific nationwide effect of trade openness from other national trends that shifted the electorate’s preferences. Given that the nationwide impact of trade-related job losses on support for the incumbent is probably not positive, this analysis most likely provides a conservative estimate of the electoral effect of these job losses on the nationwide vote. Third and finally, the analysis should not be seen as estimating the total impact of trade openness on voting. It could be, for example, that a county that experienced many trade-related job losses gained other jobs from trade-related investments, perhaps leading to a net gain of jobs. Moreover, trade openness has an impact on the overall state of the economy (e.g., by spurring growth), which in turn also affects voters’ preferences. The findings of this analysis should therefore be interpreted as capturing the electoral impact of one aspect of trade, albeit a politically salient one, namely, the loss of local jobs. DATA AND MEASUREMENT The analysis covers all 3,111 U.S. counties on which complete voting data are available. The counties of Alaska are excluded because its electoral wards do not match the county boundaries. The voting data comes from the Congressional Quarterly’s Voting and Elections Collection. Data on trade-related job losses are based on applications submitted to the TAA program in the DOL. Because the measure of trade-related job losses is central to all subsequent analyses, this section describes the TAA data in some detail. Trade Adjustment and Assistance Data The TAA program was established as part of the Trade Expansion Act in 1962, with the objective of providing reemployment services and benefits to workers whose employment was hurt by America’s trading relations. By providing legislatures with a means to compensate constituents hurt by the signing of new free trade agreements, the TAA was seen as a useful political tool for helping pass legislation geared toward trade liberalization. To be eligible for TAA benefits, a worker must receive certification by the DOL confirming that certain requirements are met: (1) the worker’s employer produces an article; and (2) the workers applying have been totally or partially laid off as a result of (a) import competition that led to decline in sales or production, (b) a shift in production to another country with which the United States has a trade agreement, or (c) due to loss of business as an upstream supplier or downstream producer for another company that is TAA certified.15 Each application, which requires at least three petitioners, refers to a group of workers at a specific 15 As part of the “Recovery Act,” these eligibility criteria were slightly altered in May 2009. location that produces a specific product for a specific company. Applications made to the TAA division are then reviewed by investigative teams at the DOL and, if found to have merit, are granted a TAA certification that provides the workers with eligibility to a range of benefits.16 If the petition is certified, then the certification covers all workers in the group regardless of whether their names appeared as claimants on the petition. TAA petitions include information about the name of the employer, the estimated number of affected workers, the application and determination date, and the address of the workplace.17 In total, the dataset I use for the 8-year period between 1996 and 2004 includes 22,287 applications representing 2,110,310 employees.18 Table 1 provides the key summary statistics.19 As noted, the key dependent variable of interest in the analysis is the relative change in Bush’s vote share between the 2000 and 2004 elections. I therefore calculate all trade-related job dislocations that occurred in the 4 years between the two elections based on the determination dates provided by the TAA. Within this period, I classify the applications along two dimensions. The first dimension distinguishes between applications that the DOL certified for TAA benefits and those that were denied. The second dimension is the cause that brought about the job dislocation: (1) offshoring of production, (2) import competition, and (3) indirect foreign competition.20 I then calculate the percentage 16 These benefits include a “trade readjustment allowance” for up to 52 weeks after workers’ unemployment compensation benefits are exhausted (provided during the period in which a worker is participating in an approved full-time training program), a 2-year “wage insurance” that covers 50% of the difference between workers’ old and new salaries, support for the costs associated with retraining for another job or career, and tax credits for health care costs covering up to 65% of the workers’ monthly health insurance premium.The exact benefits have changed somewhat over the years. 17 Approximately 15% of the applications in the DOL’s archive had incomplete address information that did not provide ZIP code data. For these slightly more than 3,000 cases, I used the companies’ Web sites and the U.S. Post Office Web site to locate the addresses and match the exact ZIP codes of the affected businesses. The information was then manually recorded. 18 The TAA division reports a slightly different set of figures. The figures reported here are obtained after aggregating data from the different TAA programs, eliminating duplicate entries and terminated applications, as well as applications that had missing data or that took place in the same calendar year but occurred after the election date. Note that the figure treats TAA applications made by different divisions of the same “mother company” as separate petitions. See the online Appendix at http://www.journals.cambridge.org/psr2011003 for a more detailed discussion of consolidating the TAA petitions into the final dataset. 19 Following the signing of NAFTA in December 1993, the DOL established an additional program (NAFTA-TAA) that operated in parallel to the general TAA program in order to deal specifically with job dislocations caused by NAFTA. With the passing of the 2002 Trade Act, the two programs were consolidated and continued to operate under the banner of the TAA program. The data used in the analysis include all applications made to the TAA and the NAFTA-TAA programs during the period 1996–2004. 20 The third category includes the job dislocations resulting from a loss of business of an upstream supplier or a downstream producer for a TAA-certified company. 171
Costly Jobs February 2011 TABLE 1.Descriptive Statistics: the location of trade-related job losses was not evenly spread geographically.As the map in Figure 2a shows. TAA Applications 1996-2004,by the areas that suffered the highest share of trade- Administration Period related layoffs were the Northeast,the "Rust Belt," Time Period the South,and the Midwest.In contrast,employment in the Great Plains region (e.g.,Nebraska,North and Variable 1996-2000 2001-04 South Dakota,Oklahoma)was almost unaffected by trade-related competition.Notably,Figure 2 also high- Applications made 9,462 12,825 lights the fact that the geographic pattern of trade- Workers represented in 906,675 1.203,635 related layoffs differs from the pattern of the overall applications Applications approved 63.4% 60.4% change in unemployment in that period (Figure 2b),the Workers certified 692.999 909.873 concentration in absolute levels of unemployment in Workers denied 211,292 290,432 2004(Figure 2c),and the pattern of"generic"(i.e.,not Average workers per 95.8 93.9 only trade-related)layoffs in that same 4-year period.22 application These variables capture related,yet clearly different phenomena. Notes:NAFTA,North American Free Trade Agreement:TAA. The prevalence of trade-related layoffs varied not Trade Adjustment and Assistance.Data prior to 2002 includes ooth TAA and NAFTA-TAA programs combined. only across geographic units,but also across indus- tries.Overall,applications to the TAA were made by 340 different industries.23 Between 2001 and 2004,the industry with the highest number of affected work- ers was the "electronic components and accessories," of workers affected by each cause as a share of the total followed by "men's and boys'furnishing,work cloth- workforce in the county. ing,and allied garments"(with 115,218 workers and The DOL produces a report explaining each decision 65,119 workers,respectively).See Table A2 in the on- to deny workers TAA certification.A reading of those line Appendix(available at http://www.journals.cam- reports,as well as conversations with personnel at the bridge.org/psr2011003)for more details on the distri- TAA division,suggest that many of the cases denied bution of TAA applications across industries. TAA certification are nonetheless instances in which One potential concern in using the TAA data for this workers were hurt by foreign competition,even if not analysis is selection bias.For selection bias to affect the in a way that met the DOL's eligibility criteria for re- results of the analysis,one must consider two distinct ceiving government compensation.The TAA's reports possibilities.The first is that the "nonapplicants"(i.e., reveal two common reasons for denial.The first is when those workers whose employment was hurt by trade- the applicant is not able to prove that the job disloca- related competition but did not apply to the TAA)are tion was caused primarily by foreign competition.That dispersed geographically in a similar fashion to those is,workers whose employer was hurt by both foreign that did apply.Put differently,no location factors ac- competition and other reasons are often denied TAA count for,or correlate with,workers'decision to apply certification.The second reason is when the employer for TAA certification.If that is the case,estimates of is judged not to produce an"article,"a definition that can exclude some providers of services.21 In both cases, the electoral effect of trade-related layoffs will be over- stated.However,this concern is at least partly allevi- the workers included in the applications had good rea- ated by the fact that the analysis relies on the firm-level son to view themselves as hurt by trade openness,de- data collected as part of the DOL's investigation of an spite being ineligible for TAA certification.For this application,not on each affected worker petitioning reason,in the subsequent analysis,I measure trade- individually.In other words,a single application from related job dislocations using all applications submitted a plant that laid off workers is sufficient for the entire to the TAA,whether certified or denied.I then repeat number of affected workers in the plant to be recorded the analysis using separate measures for certified and in the TAA data,regardless of whether those workers denied cases. then collected the TAA benefits.24 Businesses from about half the U.S.counties (50.2%) applied to the TAA in the 4 years preceding the 2004 elections.In those counties from which TAA applica- 22"Generic"layoffs are calculated using data from the MLSprogram tions were submitted,an average of 2%of the work- at the Bureau of Labor Statistics(BLS).I return to discuss these data force was represented.In total,76%of the applicants and the generic layoffs measure in greater detail in the Robustness section. were certified to receive TAA compensation.The most 23 Industries defined at the three-digit Standard Industrial Classifi- common reason for certification was import competi- cation (SIC)leveL tion (43%),followed by offshoring (42%).Notably, 24 To make this distinction clearer,consider an example of a U.S company relocating overseas and laying off its 200 workers.Let us assume that only 20 workers apply to the DOL for TAA certifica- 21 That some of the companies providing services were ineligible for tion and that after receiving the DOL's certification,only 10 of the TAA compensation means that the coverage of the TAA data does workers actually collect the full TAA benefits,whereas the others not completely represent all instances of trade-related job losses. immediately find new jobs.When the DOL assesses the petitions However,this is not a major issue because trade-related service job from this plant,it produces a single report that either certifies or losses still account for only a small share of the overall jobs lost due denies all affected workers.The dataset I use thus includes the total to foreign competition(Blinder 2009,1). number of workers considered by the DOL as affected by the plant 172
Costly Jobs February 2011 TABLE 1. Descriptive Statistics: TAA Applications 1996–2004, by Administration Period Time Period Variable 1996–2000 2001–04 Applications made 9,462 12,825 Workers represented in 906,675 1,203,635 applications Applications approved 63.4% 60.4% Workers certified 692,999 909,873 Workers denied 211,292 290,432 Average workers per 95.8 93.9 application Notes: NAFTA, North American Free Trade Agreement; TAA, Trade Adjustment and Assistance. Data prior to 2002 includes both TAA and NAFTA-TAA programs combined. of workers affected by each cause as a share of the total workforce in the county. The DOL produces a report explaining each decision to deny workers TAA certification. A reading of those reports, as well as conversations with personnel at the TAA division, suggest that many of the cases denied TAA certification are nonetheless instances in which workers were hurt by foreign competition, even if not in a way that met the DOL’s eligibility criteria for receiving government compensation. The TAA’s reports reveal two common reasons for denial. The first is when the applicant is not able to prove that the job dislocation was caused primarily by foreign competition. That is, workers whose employer was hurt by both foreign competition and other reasons are often denied TAA certification. The second reason is when the employer is judged not to produce an “article,” a definition that can exclude some providers of services.21 In both cases, the workers included in the applications had good reason to view themselves as hurt by trade openness, despite being ineligible for TAA certification. For this reason, in the subsequent analysis, I measure traderelated job dislocations using all applications submitted to the TAA, whether certified or denied. I then repeat the analysis using separate measures for certified and denied cases. Businesses from about half the U.S. counties (50.2%) applied to the TAA in the 4 years preceding the 2004 elections. In those counties from which TAA applications were submitted, an average of 2% of the workforce was represented. In total, 76% of the applicants were certified to receive TAA compensation. The most common reason for certification was import competition (43%), followed by offshoring (42%). Notably, 21 That some of the companies providing services were ineligible for TAA compensation means that the coverage of the TAA data does not completely represent all instances of trade-related job losses. However, this is not a major issue because trade-related service job losses still account for only a small share of the overall jobs lost due to foreign competition (Blinder 2009, 1). the location of trade-related job losses was not evenly spread geographically. As the map in Figure 2a shows, the areas that suffered the highest share of traderelated layoffs were the Northeast, the “Rust Belt,” the South, and the Midwest. In contrast, employment in the Great Plains region (e.g., Nebraska, North and South Dakota, Oklahoma) was almost unaffected by trade-related competition. Notably, Figure 2 also highlights the fact that the geographic pattern of traderelated layoffs differs from the pattern of the overall change in unemployment in that period (Figure 2b), the concentration in absolute levels of unemployment in 2004 (Figure 2c), and the pattern of “generic” (i.e., not only trade-related) layoffs in that same 4-year period.22 These variables capture related, yet clearly different phenomena. The prevalence of trade-related layoffs varied not only across geographic units, but also across industries. Overall, applications to the TAA were made by 340 different industries.23 Between 2001 and 2004, the industry with the highest number of affected workers was the “electronic components and accessories,” followed by “men’s and boys’ furnishing, work clothing, and allied garments” (with 115,218 workers and 65,119 workers, respectively). See Table A2 in the online Appendix (available at http://www.journals.cambridge.org/psr2011003) for more details on the distribution of TAA applications across industries. One potential concern in using the TAA data for this analysis is selection bias. For selection bias to affect the results of the analysis, one must consider two distinct possibilities. The first is that the “nonapplicants” (i.e., those workers whose employment was hurt by traderelated competition but did not apply to the TAA) are dispersed geographically in a similar fashion to those that did apply. Put differently, no location factors account for, or correlate with, workers’ decision to apply for TAA certification. If that is the case, estimates of the electoral effect of trade-related layoffs will be overstated. However, this concern is at least partly alleviated by the fact that the analysis relies on the firm-level data collected as part of the DOL’s investigation of an application, not on each affected worker petitioning individually. In other words, a single application from a plant that laid off workers is sufficient for the entire number of affected workers in the plant to be recorded in the TAA data, regardless of whether those workers then collected the TAA benefits.24 22 “Generic” layoffs are calculated using data from the MLS program at the Bureau of Labor Statistics (BLS). I return to discuss these data and the generic layoffs measure in greater detail in the Robustness section. 23 Industries defined at the three-digit Standard Industrial Classifi- cation (SIC) level. 24 To make this distinction clearer, consider an example of a U.S. company relocating overseas and laying off its 200 workers. Let us assume that only 20 workers apply to the DOL for TAA certification and that after receiving the DOL’s certification, only 10 of the workers actually collect the full TAA benefits, whereas the others immediately find new jobs. When the DOL assesses the petitions from this plant, it produces a single report that either certifies or denies all affected workers. The dataset I use thus includes the total number of workers considered by the DOL as affected by the plant 172
American Political Science Review Vol.105,No.1 FIGURE 2.Geographic Distribution of Job Dislocations and Unemployment(November 2000-November 2004) (a)Trade-related Layoffs(2000-04) (b)Change in Unemployment (2000-04) 0% 41指92 01%1% 0.1%-0.% 1.1%3% %例 3%-5% 21%.33w 51%-28% 33%-71% (d)'Generic'Layoffs(2000-04) (c)Unemployment Rate(2004) % 0%+43% 通1%。修 44%-57% 1.1%-% 58%.74% 7.5%10% 1% 156. 1% Note:Each map represents a different measure of the employment situation by county(clockwise):(a)the share of county workforce applying for Trade Adjustment and Assistance (TAA)compensation for trade-related job dislocations between 2000 and 2004,(b)the unemployment change in the county(2004 level minus 2000 level),(c)the county's absolute unemployment rate in 2004,and(d)the share of county workforce laid off for any reason as part of a mass layoff(>50 workers)between 2000 and 2004. The second possibility is that some characteristics of represent a lower bound of the true electoral effect of the counties from which applications were submitted trade-related job losses.In conclusion then.selection also account for the propensity of workers to apply bias is unlikely to be the explanation for the findings for TAA compensation.Given this possibility,we must presented in the later analyses. again consider two scenarios.The first is that these county characteristics are also correlated with decreas- ing support for the president.Although theoretically Other Controls possible,for this to be the case.any determinant of the decision to apply for TAA compensation must be- The benchmark specification in the analyses controls as revealed by the results presented here-dispersed for three types of county-level factors that may account geographically in a manner that correlates with op- for variation in voting outcomes:unemployment,in- posite partisan shifts between the 1996-2000 elections come,and demographic characteristics. (Democrats losing votes)and the 2000-04 elections Unemployment measures are included in the analysis (Republicans losing votes).This possibility,in itself, in order to control for the "generic"electoral effect seems quite improbable.The second option is that the associated with absolute level and change in level of same county characteristics that explain workers'deci- employment in the county.Employment data are ob- sions to apply for TAA compensation are orthogonal tained from the Local Area Unemployment Statistics to voting preferences.In this case,the results would be (LAUS)program of the Bureau of Labor Statistics biased against finding that trade-related layoffs have a (BLS).As noted,estimations include three unemploy- larger electoral effect;this would be because counties ment measures:unemployment rate in the year of the from which no TAA applications were made did in election,the change in unemployment rate in the year fact experience trade-related job losses that are not preceding the election,and the change in unemploy- captured in the data.My estimates,in this case,would ment between the two election years.For robustness. I also use measures of general layoffs (i.e.,not only trade related)at the county level using data from the closure(in this case,200 workers),notjust the 20 workers that applied Mass Layoff Statistics (MLS)program at the BLS. nor just the 10 workers that ultimately used the TAA benefits As Figure 2 indicated,the correlation between the 173
American Political Science Review Vol. 105, No. 1 FIGURE 2. Geographic Distribution of Job Dislocations and Unemployment (November 2000–November 2004) Note: Each map represents a different measure of the employment situation by county (clockwise): (a) the share of county workforce applying for Trade Adjustment and Assistance (TAA) compensation for trade-related job dislocations between 2000 and 2004, (b) the unemployment change in the county (2004 level minus 2000 level), (c) the county’s absolute unemployment rate in 2004, and (d) the share of county workforce laid off for any reason as part of a mass layoff (≥ 50 workers) between 2000 and 2004. The second possibility is that some characteristics of the counties from which applications were submitted also account for the propensity of workers to apply for TAA compensation. Given this possibility, we must again consider two scenarios. The first is that these county characteristics are also correlated with decreasing support for the president. Although theoretically possible, for this to be the case, any determinant of the decision to apply for TAA compensation must be— as revealed by the results presented here—dispersed geographically in a manner that correlates with opposite partisan shifts between the 1996–2000 elections (Democrats losing votes) and the 2000–04 elections (Republicans losing votes). This possibility, in itself, seems quite improbable. The second option is that the same county characteristics that explain workers’ decisions to apply for TAA compensation are orthogonal to voting preferences. In this case, the results would be biased against finding that trade-related layoffs have a larger electoral effect; this would be because counties from which no TAA applications were made did in fact experience trade-related job losses that are not captured in the data. My estimates, in this case, would closure (in this case, 200 workers), not just the 20 workers that applied nor just the 10 workers that ultimately used the TAA benefits. represent a lower bound of the true electoral effect of trade-related job losses. In conclusion then, selection bias is unlikely to be the explanation for the findings presented in the later analyses. Other Controls The benchmark specification in the analyses controls for three types of county-level factors that may account for variation in voting outcomes: unemployment, income, and demographic characteristics. Unemployment measures are included in the analysis in order to control for the “generic” electoral effect associated with absolute level and change in level of employment in the county. Employment data are obtained from the Local Area Unemployment Statistics (LAUS) program of the Bureau of Labor Statistics (BLS). As noted, estimations include three unemployment measures: unemployment rate in the year of the election, the change in unemployment rate in the year preceding the election, and the change in unemployment between the two election years. For robustness, I also use measures of general layoffs (i.e., not only trade related) at the county level using data from the Mass Layoff Statistics (MLS) program at the BLS. As Figure 2 indicated, the correlation between the 173