Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125719
Authors: 
Asatryan, Zareh
Braun, Sebastian
Lechthaler, Wolfgang
Mileva, Mariya
Montagna, Catia
Year of Publication: 
2014
Series/Report no.: 
WWWforEurope Working Paper 63
Abstract: 
Fears of rising wage inequality and job loss loom large in current debates on free trade. Surprisingly, however, there exists little academic research on how to compensate those who lose from free trade. This policy paper reviews the existing theoretical literature on trade and compensation, and derives guidelines on how to design compensation schemes in practice. The existing theoretical literature suggests that active labour market policies, targeted to workers who lose from free trade, are a promising way of compensation. In line with this theoretical recommendation, we find that countries open to free trade also spend more on active labour market policies.
Subjects: 
Challenges for welfare system
Globalisation
Labour markets
Policy options
Welfare state
JEL: 
F10
F20
J30
J60
Document Type: 
Working Paper
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