New Research on the Effect of Regulation on Low-Income Households and a US-UK Trade Agreement

Research Round-Up: January 14, 2019

Strengthening the US Economy through a US-UK Trade Agreement

Daniel Griswold | Public Interest Comment

From the comment: "The governments of the United States and the United Kingdom should commit themselves to negotiating an ambitious and liberalizing bilateral commercial agreement that would enter into force immediately or soon after the United Kingdom exits the European Union’s common customs territory. A bilateral trade agreement between the United States and the United Kingdom should be written in such a way that other nations can join the existing agreement with few, if any, modifications. This “open architecture” approach would allow other trading partners, such as Australia, Canada, Mexico, and New Zealand to join, increasing the extent of the duty-free and barrier-free commercial zone.

Whether the United States and the United Kingdom decide to pursue a bilateral agreement or another route, the goal should be the same: zero barriers to the movement of goods, services, capital, and people between the two nations that have arguably done more than any other nations in the postwar era to lead the world to a more free and open global economy.”

The Effect of Regulation on Low-Income Households

Dustin Chambers, Diana Thomas, Patrick A. McLaughlin, and Kathryn Waldron | Policy Brief

From the brief: "Regulation has a plethora of unintended consequences that place a disproportionate burden on low-income workers and their families. By raising prices, slowing wage growth, and limiting employment and entrepreneurial opportunities, regulation reduces the economic potential of poor people.

Echoing Chambers, McLaughlin, and Stanley, we recommend three policy goals that regulators should keep in mind to reduce the negative effects of regulation on low-income households. First, regulators should only use regulation to solve well-documented and widespread or systemic social problems. Regulators should avoid rules that address nonexistent problems or are intended to prop up failed policies. Second, regulators should consider alternative methods or policies to ensure that regulation is in fact the optimal tool for fixing the problem at hand. In addition, regulators should ensure they are using the correct regulatory modality. For example, McLaughlin, Ellig, and Shamoun advocate registration, certification, and titling policies because they are less economically damaging than occupational licensing. Finally, regulators should review existing regulation to ensure efficacy and a lack of unintended regressive effects.

While we propose these goals specifically to address entry regulation, we believe they are also useful when considering any new regulation. Regulation may be effective at achieving some of its objectives, but unintentional regressive consequences should serve as warning to proceed with caution to policymakers looking to use regulation as their primary policy instrument."