publication . Research . Conference object . Preprint . 2012

Unemployment Benefits as Redistribution Scheme of Trade Gains - a Positive Analysis

Marco de Pinto;
Open Access
  • Published: 01 May 2012
  • Publisher: FIW - Research Centre International Economics Vienna
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-de.ned threshold, the trade gains will be completely destroyed...
Subjects
free text keywords: heterogeneous firms, trade liberalization, heterogeneous firms, trade unions, skillspecific unemployment, unemployment benefits, taxes, F10, trade liberalization, unemployment benefits, H20, taxes, F16, H2, trade unions, F1, skill-specific unemployment, trade liberalization, heterogeneous firms, trade unions,skill-specific unemployment, unemployment benefits, taxes, skillspecific unemployment, jel:H20, jel:F10, jel:H2, jel:F1, jel:F16, ddc:330
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Research . 2012
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Conference object . 2012
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3 = (1 + tpw) ! < 1: 0

3 = (1 + tpw) ! < 1: 0

k= [27] Itskhoki, Oleg (2008): Optimal Redistribution in an Open Economy, manuscript, Havard University.

[29] Layard, Richard and Stephen Nickell (1990): Is Unemployment Lower if Unions Bargain over Employment?, Quarterly Journal of Economics 105(3): 773-787.

[31] Melitz, Marc J. (2003): The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity, Econometrica 71(6): 1695- 1725.

[32] Michaelis, Jochen and Michael P&#x87;üger (2000): "The Impact of Tax Reforms on Unemployment in a SMOPEC", Journal of Economics, 72(2): 175-201.

[33] Munch, Jakob Roland and Jan Rose Skaksen (2008): Human Capital and Wages in Exporting Firms, Journal of International Economics 75(2): 363- 372.

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-de.ned threshold, the trade gains will be completely destroyed...
Subjects
free text keywords: heterogeneous firms, trade liberalization, heterogeneous firms, trade unions, skillspecific unemployment, unemployment benefits, taxes, F10, trade liberalization, unemployment benefits, H20, taxes, F16, H2, trade unions, F1, skill-specific unemployment, trade liberalization, heterogeneous firms, trade unions,skill-specific unemployment, unemployment benefits, taxes, skillspecific unemployment, jel:H20, jel:F10, jel:H2, jel:F1, jel:F16, ddc:330
Download fromView all 6 versions
EconStor
Research . 2012
Provider: EconStor
EconStor
Conference object . 2012
Provider: EconStor

3 = (1 + tpw) ! < 1: 0

3 = (1 + tpw) ! < 1: 0

k= [27] Itskhoki, Oleg (2008): Optimal Redistribution in an Open Economy, manuscript, Havard University.

[29] Layard, Richard and Stephen Nickell (1990): Is Unemployment Lower if Unions Bargain over Employment?, Quarterly Journal of Economics 105(3): 773-787.

[31] Melitz, Marc J. (2003): The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity, Econometrica 71(6): 1695- 1725.

[32] Michaelis, Jochen and Michael P&#x87;üger (2000): "The Impact of Tax Reforms on Unemployment in a SMOPEC", Journal of Economics, 72(2): 175-201.

[33] Munch, Jakob Roland and Jan Rose Skaksen (2008): Human Capital and Wages in Exporting Firms, Journal of International Economics 75(2): 363- 372.

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publication . Research . Conference object . Preprint . 2012

Unemployment Benefits as Redistribution Scheme of Trade Gains - a Positive Analysis

Marco de Pinto;