challenges the two basic functions of the welfare state, redistribution and social insurance when private unemployment insurance … markets are missing. The main results are: (i) outsourcing raises unemployment and labor income risk of unskilled workers; (ii … welfare optimal redistribution and unemployment insurance policies. -- Outsourcing ; unemployment ; social insurance …

unemployment. Four main results are derived: (i) the optimal size of the welfare state depends on the degree of risk-aversion and … the unemployment rate as a measure of labor income risk. The unemployment rate partly reflects the country's exposure to … globalization; (ii) corporate taxation and social insurance have equivalent effects on unemployment and outbound FDI; (iii) while an …