Welfare State, Market Imperfections, and International Trade
AbstractWithin a two-sector-two-country model of trade with aggregate scale economies and unionisation, a more generous welfare state in one country increases welfare in that country and can have positive spillover effects on the other. Furthermore, synchronised expansions of social security are more welfare enhancing than unilateral ones. Our results counter the fears that a race to the bottom in social standards may result from the â€˜shrinking-tax-baseâ€™ entailed by international capital mobility. While affecting trade patterns and income distribution, capital mobility interacts with welfare state policies in increasing welfare, even when capital flows out of the country that initiates the shock. Copyright Springer Science+Business Media, LLC 2007
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Bibliographic InfoArticle provided by Springer in its journal Open Economies Review.
Volume (Year): 18 (2007)
Issue (Month): 1 (February)
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Web page: http://www.springerlink.com/link.asp?id=100323
Welfare state; Circular causation; International trade; E6; F1; F4; H3; J5;
Other versions of this item:
- Hassan Molana & Catia Montagna, 2003. "Welfare State, Market Imperfections and International Trade," Dundee Discussion Papers in Economics 146, Economic Studies, University of Dundee.
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- F1 - International Economics - - Trade
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
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