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Title:Outsourcing, unemployment and welfare policy PDF Logo
Authors:Keuschnigg, Christian
Ribi, Evelyn
Issue Date:2008
Series/Report no.:CESifo working paper 2452
Abstract:The paper investigates the consequences of outsourcing of labor intensive activities to low-wage economies. This trend challenges the two basic functions of the welfare state, redistribution and social insurance when private unemployment insurance markets are missing. The main results are: (i) outsourcing raises unemployment and labor income risk of unskilled workers; (ii) it increases inequality among high- and low-income groups; and (iii) the gains from outsourcing can be made Pareto improving by using a redistributive linear income tax if redistribution is initially not too large. We finally derive the welfare optimal redistribution and unemployment insurance policies.
Subjects:Outsourcing
unemployment
social insurance
redistribution
JEL:F23
H21
J64
J65
L23
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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