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 172Costly 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 re￾ceiving 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 disloca￾tion 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 rea￾son to view themselves as hurt by trade openness, de￾spite being ineligible for TAA certification. For this reason, in the subsequent analysis, I measure trade￾related 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 applica￾tions were submitted, an average of 2% of the work￾force was represented. In total, 76% of the applicants were certified to receive TAA compensation. The most common reason for certification was import competi￾tion (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 trade￾related 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 high￾lights the fact that the geographic pattern of trade￾related 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 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,” followed by “men’s and boys’ furnishing, work cloth￾ing, and allied garments” (with 115,218 workers and 65,119 workers, respectively). See Table A2 in the on￾line Appendix (available at http://www.journals.cam￾bridge.org/psr2011003) for more details on the distri￾bution 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 trade￾related 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 ac￾count 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 over￾stated. However, this concern is at least partly allevi￾ated 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 certifica￾tion 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