Legislated Incentives and Expectations

Abstract

The United States Congress passes several pieces of legislation with the intent to improve the overall livelihood of Americans and assist other nations toward economic development. This collection of essays identifies three acts of Congress which attempt to i) enhance livelihood of Americans through free trade, ii) help the economic development of a poor nation, and iii) attempt to enhance employment opportunities of Americans who historically have low employment rates. Chapter 1 considers the Korean-U.S. Free Trade Agreement (KORUS). The KORUS Free Trade Agreement was created with the intent to expand and secure each country’s global competiveness. The U.S. import market for automotive wire harnesses is examined to evaluate the expected benefits to U.S. importers and South Korean exporters. The results suggest relatively small direct benefits from the removal of tariffs on wire harnesses, which may indicate similar results for other automotive component trade. However, indirect effects from the free trade agreement may give each side of the market greater benefits through flexibility to optimize cost structures. Chapter 2 investigates U.S. efforts to develop the economy of Haiti through removal of tariffs on Haitian produced apparel. The analysis suggests tariff removal for cotton based apparel should be expected to be different from tariff removal for wool and synthetic based apparel. Results suggest potential increases in exports to the U.S., but with limited new opportunities for Haiti’s existing production. A potential for negative impacts for Haitian farmers is identified from separate legislation with the intent to enhance the Haitian apparel industry. In general, Haiti’s own development of infrastructure may provide increased income for Haitians through internal transportation cost reductions and provide greater opportunities to more value-added apparel products. The third chapter uses categorical analysis to measure impacts of the Work Opportunity Tax Credit (WOTC) employer hiring incentive program for employment conditions of U.S. veterans compared to their non-veteran counterparts. The results indicate disabled veterans may have gained versus their disabled non-veteran counterparts. Future benefits to disabled non-veterans may come from employment accommodations provided to disabled veterans through the WOTC. Employee reactions appear more influential to program success than reactions of employers.