Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69603
Authors: 
Vannoorenberghe, Gonzague
Janeba, Eckhard
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper: Trade Policy 4062
Abstract: 
This paper analyzes the effects of trade liberalisation on the political support for policies that redistribute income between workers in different sectors. We allow for worker heterogeneity and imperfect mobility of workers across sectors, giving rise to a trade-off between redistribution and the inefficiency of the labor allocation. We compare two environments, autarky and small open economy, and present three main findings. First, redistributive policies are more likely to arise in a small open than in a closed economy. Second, if a redistributive policy is adopted in both situations, its nominal level is higher in autarky than in the small open economy. Third, even though voters choose redistributive policies with lower nominal value in open economies, the actual extent of redistribution in equilibrium is larger in the open than in the closed economy. We discuss our results in the context of the debate about the effects of globalisation on government activity.
Subjects: 
international trade
redistribution
political economy
factor mobility
JEL: 
F10
H20
Document Type: 
Working Paper

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