Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107359
Authors: 
Ranjan, Priya
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5191
Abstract: 
This paper studies the welfare and policy implications of globalization when risk averse workers face the risk of unemployment. If the jobs performed by domestic workers can be easily substituted by imports, then globalization reduces wages and increases unemployment. In this situation, in the absence of any government intervention globalization not only reduces the welfare of workers but could reduce social welfare as well. Both unemployment benefits and severance payments can protect workers against labor income risk, but the latter enhances welfare more if job destruction is the source of unemployment. When optimal redistribution and social protection policies are in place, globalization necessarily improves social welfare.
Subjects: 
offshoring
unemployment
endogenous job destruction
severance payments
unemployment benefits
JEL: 
F16
F66
F68
Document Type: 
Working Paper

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