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The redistribution of trade gains and the equity-efficiency trade-off
The contribution of this paper is to derive an optimal redistribution scheme for trade gains in the case of government's objective function that explicitly accounts for equity-efficiency trade-off. The government pays unemplyment benefits (UB) either financed by a wage tax, a payroll tax or a p...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 44-2012) |
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| Main Author: | |
| Format: | Work |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | The contribution of this paper is to derive an optimal redistribution scheme for trade gains in the case of government's objective function that explicitly accounts for equity-efficiency trade-off. The government pays unemplyment benefits (UB) either financed by a wage tax, a payroll tax or a profit tax paid by exporters only. Using a melitz-type framework with unionized labor markets and heterogeneous workers we show that there is a clear-cut ranking of the redistribution schemes in terms of welfare leve: 1. UB financed by a profit tax paid by exporters 2. UB financed by a wage tax, 3. UB financed by a payroll tax. |
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| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0157 |