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Outsourcing, Unemployment and Welfare Policy

versione breve 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.
   
tipo Journal paper
   
parole chiave Outsourcing, unemployment, social insurance, redistribution
   
lingua English
kind of paper journal article
data di apparenza 5-2-2009
giornale Journal of International Economics
Editore Elsevier (Amsterdam)
ISSN 0022-1996
edizione del giornale 78
numero del giornale 1
pagine 168-176
review not review
   
citation Keuschnigg, C., & Ribi, E. (2009). Outsourcing, Unemployment and Welfare Policy. Journal of International Economics, 78(1), 168-176.