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Egalitarian redistribution in the era of hyper-globalization

Author

Listed:
  • Gianluca Grimalda

    (Kiel Institute for the World Economy - Kiel Institute for the World Economy)

  • Alain Trannoy

    (EHESS - École des hautes études en sciences sociales, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Fernando Filgueira

    (Faculdad de ciencias sociales, Universidad de la Republica)

  • Karl Ove Moene

    (Department of Economics [Oslo] - Faculty of Social Sciences [Oslo] - UiO - University of Oslo)

Abstract

Two traditional theorems of welfare economics posit a trade-off between a government redistribution targets and efficiency. We propose a third ‘claim' of welfare economics, stating that in closed economies the actual efficiency costs associated with redistribution are small. We then examine the claim in the current phase of ‘hyper-globalization'. On the one hand, a race-to-the-bottom in taxation restricts the capacity to tax high-earners and the associated brain drain may affect a country's long-run growth. On the other hand, demand for social insurance should be particularly high in an open economy, especially with advancing digitalization. Xenophobic sentiments may, however, offset this demand. We also discuss the impact of globalization on wage equalization and productive efficiency. We conclude against the idea that the welfare state is intrinsically unable to carry out its redistributive function in an era of globalization. However, its strategies and tools of intervention must be rethought.

Suggested Citation

  • Gianluca Grimalda & Alain Trannoy & Fernando Filgueira & Karl Ove Moene, 2020. "Egalitarian redistribution in the era of hyper-globalization," Post-Print hal-02482094, HAL.
    • Handle: RePEc:hal:journl:hal-02482094
    DOI: 10.1080/00346764.2020.1714072
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    Cited by:

    1. Li, Qianqian & Zhao, Zhengtang & Chen, Tingting, 2024. "The effect of public pension insurance integration on income disparities between urban-rural households: Evidence from a quasi-experiment in China," Finance Research Letters, Elsevier, vol. 66(C).
    2. Joël Hellier, 2021. "Globalization, Income Tax and the Redistribution–Progressivity Tradeoff," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(3), pages 384-410, September.
    3. Colombino, Ugo & Islam, Nizamul, 2022. "The "Robot Economy" and Optimal Tax-Transfer Reforms," IZA Discussion Papers 15198, Institute of Labor Economics (IZA).
    4. Yama Temouri & Vijay Pereira & Agelos Delis & Geoffrey Wood, 2023. "How Does Protectionism Impact Multinational Firm Reshoring? Evidence from the UK," Management International Review, Springer, vol. 63(5), pages 791-822, October.
    5. Ugo Colombino & Nizamul Islam, 2022. "The “Robot Economy†and optimal tax-transfer reforms," CHILD Working Papers Series 101 JEL Classification: H, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    6. Ugo Colombino & Nizamul Islam, 2021. "Global and digitalised economy, new labour demand scenarios and optimal tax-transfer reforms," CHILD Working Papers Series 90 JEL Classification: H2, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    7. Steffen Torp & Jon Reiersen, 2020. "Globalization, Work, and Health: A Nordic Perspective," IJERPH, MDPI, vol. 17(20), pages 1-20, October.

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