Unemployment benefits as redistribution scheme of trade gains : a positive analysis
Marco de Pintoy
Trade liberalization is no Pareto-improvement - there are winners (high-skilled) and losers (low-skilled). To compensate the losers the government is assumed to introduce unemployment benefits (UB). These benefits are financed by either a wage tax, a payroll tax, or a profit tax. Using a Melitz-type model of international trade with unionized labour markets and heterogeneous workers we show that: (i) UB financed by a wage tax reduce aggregate employment but increase welfare measured by per capita output. (ii) UB financed by a payroll tax reduce aggregate employment and welfare. If UB exceeds a well-defined threshold, the trade gains will be completely destroyed. (iii) UB financed by a profit tax reduce the unemployment rate of the low-skilled, but also reduces welfare. The threshold for the level of UB, where the trade gains are destroyed by the redistribution scheme, is higher compared to the case of a payroll tax. -- trade liberalization ; heterogeneous firms ; trade unions ; skill-specific unemployment ; unemployment benefits, taxes
Year of publication: |
2012
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Authors: | Pintoy, Marco de |
Published in: | |
Publisher: |
Kiel : ZBW |
Subject: | Handelsliberalisierung | Trade liberalization | Arbeitslosigkeit | Unemployment | Ungelernte Arbeitskräfte | Unskilled workers | Arbeitslosenversicherung | Unemployment insurance | Steuer | Tax | Handelseffekt | Trade effect | Wohlfahrtsanalyse | Welfare analysis | Verteilungspolitik | Distributive policy | Theorie | Theory |
Saved in:
freely available
Extent: | Online-Ressource (40 S., 828,6 KB) graph. Darst. |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Systemvoraussetzungen: Acrobat Reader |
Other identifiers: | hdl:10419/66059 [Handle] |
Classification: | F1 - Trade ; F16 - Trade and Labor Market Interactions ; H2 - Taxation, Subsidies, and Revenue |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10009672613
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