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Employment Risk and Optimal Trade Policies

Author

Listed:
  • Choi, E. Kwan
  • Beladi, Hamid
  • Chen, Jiong

Abstract

This paper considers trade policies and welfare in a Harris-Todaro model with risk averse workers. Workers are assumed to have identical and homothetic preferences, but their incomes differ, depending on whether and where they are employed. When workers are equally valued, maximizing social utility is equivalent to maximizing the utility of a rural worker. An optimal policy consists of a production subsidy on the exportable and an import tariff. This model explains the widespread use of import tariffs on manufactured goods along with production subsidies on the export sectors in many LDCs.

Suggested Citation

  • Choi, E. Kwan & Beladi, Hamid & Chen, Jiong, 2001. "Employment Risk and Optimal Trade Policies," Staff General Research Papers Archive 5145, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:5145
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    1. is not listed on IDEAS
    2. Adrian BANARESCU & Aurel-Mihail BALOI, 2015. "Preventing and Detecting Fraud through Data Analytics in auto insurance field," Romanian Journal of Economics, Institute of National Economy, vol. 40(1(49)), pages 89-114, june.
    3. repec:ine:journl:v:40:y:2015:i:49:p:63-88 is not listed on IDEAS

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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