The redistribution of trade gains and the equity-efficiency trade-of
AbstractThe contribution of this paper is to derive an optimal redistribution scheme for trade gains in the case of a governments objective function that explicitly accounts for the equity-efficiency trade-o¤. The government pays unemployment benefits (UB) either .financed by a wage tax, a payroll tax or a pro.t tax paid by exporters only. Using a Melitz -type framework with unionized labor markets and heterogeneous workers we show that there is a clear-cut ranking of the redistribution schemes in terms of welfare level: 1. UB .financed by a pro.t tax paid by exporters, 2. UB .financed by a wage tax, 3. UB .financed by a payroll tax.
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Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201244.
Length: 41 pages
Date of creation: 2012
Date of revision:
Publication status: Forthcoming in
trade liberalization; heterogeneous firms; trade unions; income inequality; unemployment benefits; taxes;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-LAB-2012-11-11 (Labour Economics)
- NEP-PBE-2012-11-11 (Public Economics)
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