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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26497
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| Title: | | Outsourcing, unemployment and welfare policy  |
| 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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