Do People Support Compensation for Trade Liberalization? Evidence from a survey experiment in Japan

It is frequently argued that the Trade Adjustment Assistance (TAA) program works not only as a "remedial device" for compensating losers from trade liberalization, but also as a "political device" for easing protectionist pressure and materializing further liberalization. This paper presents new evidence from a survey experiment in Japan conducted in 2012 on the determinants of voters' preferences toward a remedial as well as a political device of TAA.

Our results suggest that: 1) When people are primed to think about the remedial aspect of TAA, "would-be losers" from trade are more likely to support TAA. 2) However, preference toward trade liberalization is not necessarily correlated with the same individual's preference toward TAA, implying that monetary compensation cannot mitigate people's non-economic concerns over liberalization. 3) If we primed respondents to think about the political device of TAA, a wide range of respondents, except for potential losers, become more supportive toward compensating trade losers.

This additional and conditional support toward TAA by some respondents including expected trade winners may be undermined, if they find the ex-post level of trade liberalization to be unsatisfactory.