EconStor >
Philipps-Universität Marburg >
Faculty of Business Administration and Economics, Philipps-Universität Marburg >
MAGKS Joint Discussion Paper Series in Economics, Universität Marburg >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/56540
  
Title:Unemployment benefits as redistribution scheme of trade gains: A positive analysis PDF Logo
Authors:de Pinto, Marco
Issue Date:2012
Series/Report no.:Joint discussion paper series in economics 10-2012
Abstract: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) UB financed by a wage tax reduce aggregate employment but increase welfare measured by per capita output. (ii) UB financed by a payroll tax reduce aggregate employment and welfare. If UB exceeds a well-defined threshold, the trade gains will be completely destroyed. (iii) UB financed by a profit tax reduce the unemployment rate of the low-skilled, but also reduces welfare. The threshold for the level of UB, where the trade gains are destroyed by the redistribution scheme, is higher compared to the case of a payroll tax.
Subjects:trade liberalization
heterogeneous firms
trade unions
skill-specific unemployment
unemployment benefits
taxes
JEL:F1
F16
H2
Document Type:Working Paper
Appears in Collections:MAGKS Joint Discussion Paper Series in Economics, Universität Marburg

Files in This Item:
File Description SizeFormat
687970466.pdf885.53 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/56540

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.