Outsourcing, Unemployment and Welfare Policy

Item Type Journal paper
Abstract

The paper investigates the consequences of outsourcing of labor intensive activities to low-wage economies. This trend challenges the two basic functions of the welfare state, redistribution and social insurance when private unemployment insurance markets are missing. The main results are: (i) outsourcing raises unemployment and labor income risk of unskilled workers; (ii) it increases inequality between high- and low-income groups; and (iii) the gains from outsourcing can be made Pareto improving by using a redistributive linear income tax if redistribution is initially not too large. We finally derive the welfare optimal redistribution and unemployment insurance policies.

Authors Keuschnigg, Christian & Ribi, Evelyn
Journal or Publication Title Journal of International Economics
Language English
Keywords Outsourcing, unemployment, social insurance, redistribution
Subjects economics
HSG Classification contribution to scientific community
Refereed No
Date 5 February 2009
Publisher Elsevier
Place of Publication Amsterdam
Volume 78
Number 1
Page Range 168-176
Number of Pages 9
ISSN 0022-1996
Depositing User Prof. Dr. Christian Keuschnigg
Date Deposited 08 Nov 2007 11:02
Last Modified 23 Aug 2016 11:03
URI: https://www.alexandria.unisg.ch/publications/41122

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Citation

Keuschnigg, Christian & Ribi, Evelyn (2009) Outsourcing, Unemployment and Welfare Policy. Journal of International Economics, 78 (1). 168-176. ISSN 0022-1996

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https://www.alexandria.unisg.ch/id/eprint/41122
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