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Displaced workers in the global economy

In the last few years, several states have passed legislation seeking to limit the amount of state-supported work that is ‘offshored’ to other countries.  Municipalities are struggling to balance new-industry attraction and business retention with the guarantee of good-wage jobs.  All of this has occasioned a broader debate on the impacts of ‘off-shoring’ on the American workforce.

Chair of the White House Council of Economic Advisers N. Gregory Mankiw remarked in February 2004 that offshoring is just “the latest manifestation of the gains from trade that economists have talked about at least since Adam Smith.”  Mankiw’s comments sparked considerable controversy

Princeton economist Alan Blinder provided a rejoinder in a Foreign Affairs magazine in which he asked if offshoring might represent "the next industrial revolution." Last year Blinder joked in a Washington Post editorial that he had been exiled from the fraternity of free traders for the "alleged apostasy" of expressing concerns about outsourcing:

I'm being treated as a heretic by many of my fellow economists. Why? Because I have stuck my neck out and predicted that the offshoring of service jobs from rich countries such as the United States to poor countries such as India may pose major problems for tens of millions of American workers over the coming decades. In fact, I think offshoring may be the biggest political issue in economics for a generation.

Blinder went on to put the figure of potentially offshorable U.S. jobs at between 30 and 40 million.

No self-respecting economist would deny that trade causes dislocations in some industries.  All acknowledge that global trade changes the sectoral and occupational composition of regional and national employment markets.  But from there, economists are divided as to what are the appropriate solutions.  

Almost all industrialized nations, including the United States, have programs to assist with trade-related economic location.  Some workforce training programs are more general, while some are specifically targeted at workers known to have lost their jobs or be 'at risk' from plant relocation and downsizing.

Some argue these specific programs are part of the problem, since it is often difficult to know exactly why folks have lost their job or why a firm has gone out of business.  Clive Crook argued last year that "the only rationale for targeting confining worker assistance to the victims of trade is political: namely, that it might buy support for open international markets."

About the current TAA program


Academic Links
Helping Dislocated Workers, Business and Communities
The Rural Dislocated Worker Initiative, run by North Carolina Rural Economic Development Center, has researched a number of local programs that assist dislocated workers.
OECD Labor Market Study
How can governments best assist workers displaced by trade to re-integrate into the labor market? This 2005 paper focuses on retraining, wage insurance, and comparative trade-adjustment costs.

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