Redistributing Gains from Globalization

Hartmut Egger () and Udo Kreickemeier

Chapter 11 in International Trade and Labor Markets:Welfare, Inequality and Unemployment, 2017, pp 307-337 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter analyzes the effects of redistribution in a model of international trade with heterogeneous firms in which a fair-wage effort mechanism leads to firm-specific wage payments and involuntary unemployment. The redistribution scheme is financed by profit taxes and gives the same absolute lump-sum transfer to all workers. International trade increases aggregate income and income inequality, ceteris paribus. If, however, trade is accompanied by a suitably chosen increase in the profit tax rate, it is possible to achieve higher aggregate income and a more equal income distribution than in autarky, provided that the share of exporters is sufficiently high.

Keywords: International Trade; Inequality; Labor Markets; Unemployment; Offshoring (search for similar items in EconPapers)
JEL-codes: J01 (search for similar items in EconPapers)
Date: 2017
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Related works:
Journal Article: Redistributing Gains from Globalisation (2009)
Working Paper: Redistributing Gains from Globalisation (2008)
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