Unemployment Benefits as Redistribution Scheme for Trade Gains - A Positive Analysis
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) there is a threshold level of UB where all trade gains are destroyed, (ii) this threshold differs between different kind of taxes, (iii) there is a clearcut ranking in terms of welfare for the chosen funding of the UB: 1. wage tax, 2. profit tax, 3. payroll tax.
|Date of creation:||Oct 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.iaaeu.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marco de Pinto & Jochen Michaelis, 2011.
"International Trade and Unemployment - the Worker-Selection Effect,"
MAGKS Papers on Economics
201127, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Marco Pinto & Jochen Michaelis, 2014. "International Trade and Unemployment—the Worker-selection Effect," Review of International Economics, Wiley Blackwell, vol. 22(2), pages 226-252, 05.
- Jakob Roland Munch & Jan Rose Skaksen, 2006.
"Human Capital and Wages in Exporting Firms,"
EPRU Working Paper Series
06-10, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Munch, Jakob Roland & Rose Skaksen, Jan, 2009. "Human Capital and Wages in Exporting Firms," Working Papers 09-2006, Copenhagen Business School, Department of Economics.
- Munch, Jakob R. & Skaksen, Jan Rose, 2006. "Human Capital and Wages in Exporting Firms," IZA Discussion Papers 2409, Institute for the Study of Labor (IZA).
- Stephen Bazen & Jean-Marie Cardebat, 2001. "The impact of trade on the relative wages and employment of low skill workers in France," Applied Economics, Taylor & Francis Journals, vol. 33(6), pages 801-810.
- Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2008.
"Globalization and Labor Market Outcomes: Wage Bargaining, Search Frictions, and Firm Heterogeneity,"
IZA Discussion Papers
3363, Institute for the Study of Labor (IZA).
- Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2011. "Globalization and labor market outcomes: Wage bargaining, search frictions, and firm heterogeneity," Journal of Economic Theory, Elsevier, vol. 146(1), pages 39-73, January.
- Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2011. "Globalization and labor market outcomes: Wage bargaining, search frictions, and firm heterogeneity," Munich Reprints in Economics 20471, University of Munich, Department of Economics.
- Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005.
"Unemployment: Macroeconomic Performance and the Labour Market,"
Oxford University Press, number 9780199279173.
- Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
- Dixit, Avinash & Norman, Victor, 1986. "Gains from trade without lump-sum compensation," Journal of International Economics, Elsevier, vol. 21(1-2), pages 111-122, August.
- Goerke, Laszlo, 1996.
"Taxes on Payroll, Revenues and Profits in Three Models of Collective Bargaining,"
Scottish Journal of Political Economy,
Scottish Economic Society, vol. 43(5), pages 549-65, November.
- Goerke, L., 1996. "Taxes on payroll, revenues and profits in three models of collective bargaining," Discussion Paper Series In Economics And Econometrics 9603, Economics Division, School of Social Sciences, University of Southampton.
- Jochen Michaelis & Michael Pflüger, 2000. "The impact of tax reforms on unemployment in a SMOPEC," Journal of Economics, Springer, vol. 72(2), pages 175-201, June.
- Booth, Alison L, 1984. "A Public Choice Model of Trade Union Behaviour and Membership," Economic Journal, Royal Economic Society, vol. 94(376), pages 883-98, December.
- Pierre Biscourp & Francis Kramarz, 2004.
"Employment, Skill Structure and International Trade : Firm-level Evidence for France,"
2004-28, Centre de Recherche en Economie et Statistique.
- Biscourp, Pierre & Kramarz, Francis, 2007. "Employment, skill structure and international trade: Firm-level evidence for France," Journal of International Economics, Elsevier, vol. 72(1), pages 22-51, May.
- Donald R. Davis & James Harrigan, 2007.
"Good Jobs, Bad Jobs, and Trade Liberalization,"
NBER Working Papers
13139, National Bureau of Economic Research, Inc.
- Kenneth R. Troske & Kimberly Bayard, 1999. "Examining the Employer-Size Wage Premium in the Manufacturing, Retail Trade, and Service Industries Using Employer-Employee Matched Data," American Economic Review, American Economic Association, vol. 89(2), pages 99-103, May.
- Haan, Peter & Prowse, Victoria L., 2010.
"The Design of Unemployment Transfers: Evidence from a Dynamic Structural Life-Cycle Model,"
IZA Discussion Papers
4792, Institute for the Study of Labor (IZA).
- Peter Haan & Victoria Prowse, 2010. "The Design of Unemployment Transfers: Evidence from a Dynamic Structural Life-Cycle Model," Discussion Papers of DIW Berlin 986, DIW Berlin, German Institute for Economic Research.
- Victoria Prowse & Peter Haan, 2010. "The design of unemployment transfers: Evidence from a dynamic structural life-cycle model," Economics Series Working Papers 478, University of Oxford, Department of Economics.
- Layard, R. & Nickell, S., 1988.
"Is Unemployment Lower If Unions Bargain Over Employment?,"
308, London School of Economics - Centre for Labour Economics.
- Layard, Richard & Nickell, Stephen, 1990. "Is Unemployment Lower if Unions Bargain over Employment?," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 773-87, August.
- Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
- Bernd Fitzenberger & Ralf A. Wilke, 2010.
"Unemployment Durations in West Germany Before and After the Reform of the Unemployment Compensation System during the 1980s,"
German Economic Review,
Verein für Socialpolitik, vol. 11, pages 336-366, 08.
- Fitzenberger, Bernd & Wilke, Ralf A., 2004. "Unemployment Durations in West-Germany Before and After the Reform of the Unemployment Compensation System During the 1980s," ZEW Discussion Papers 04-24, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Davidson, Carl & Matusz, Steven J. & Nelson, Douglas R., 2007. "Can compensation save free trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 167-186, March.
- Carl Davidson & Steven J. Matusz, 2006.
"Trade Liberalization And Compensation,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 723-747, 08.
- Brecher, Richard A. & Choudhri, Ehsan U., 1994.
"Pareto gains from trade, reconsidered : Compensating for jobs lost,"
Journal of International Economics,
Elsevier, vol. 36(3-4), pages 223-238, May.
- Richard Brecher & Eshan Choudhri, 1991. "Pareto Gains from Trade, Reconsidered: Compensating for Job Lost," Carleton Economic Papers 91-16, Carleton University, Department of Economics, revised May 1994.
- Egger, Hartmut & Kreickemeier, Udo, 2012.
"Fairness, trade, and inequality,"
Journal of International Economics,
Elsevier, vol. 86(2), pages 184-196.
- Creedy, John & McDonald, Ian M, 1992. "Union Wage Responses to a Shift from Direct to Indirect Taxation," Bulletin of Economic Research, Wiley Blackwell, vol. 44(3), pages 221-32, July.
- Nickell, Stephen & Kong, Paul, 1992. "An investigation into the power of insiders in wage determination," European Economic Review, Elsevier, vol. 36(8), pages 1573-1599, December.
When requesting a correction, please mention this item's handle: RePEc:iaa:dpaper:201204. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Adrian Chadi)
If references are entirely missing, you can add them using this form.