How Bureaucrats Represent Economic Interests: Partisan Control over Trade Adjustment Assistance

Abstract

Embedded liberalism prescribes compensating workers hurt by globalization, but government compensation programs are often criticized for their lack of responsiveness. I explain the lack of responsiveness by illuminating bureaucrats who approve the compensation programs in the frontline. I examine how career bureaucrats distribute Trade Adjustment Assistance (TAA) benefits, the single largest federal program in the United States that compensates workers displaced by international trade. Exploiting the quasi-random assignment of TAA petitions to individual investigators at different stages of their careers, I find that career bureaucrats are less likely to certify TAA petitions and are more likely to delay investigations during Republican presidencies relative to Democratic presidencies. This partisan performance, however, applies uniquely to career bureaucrats who are not tenured and increases in magnitude during periods of high alignment between labor and the Democratic Party. The political sustainability of globalization depends on an institutional design that shapes the career incentives of bureaucrats.