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- Title
Redistributing Gains from Globalisation.
- Authors
Egger, Hartmut; Kreickemeier, Udo
- Abstract
This paper analyses 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.
- Subjects
GLOBALIZATION; INTERNATIONAL economic relations; INTERNATIONAL trade; EXPORTERS; COMMERCIAL policy
- Publication
Scandinavian Journal of Economics, 2009, Vol 111, Issue 4, p765
- ISSN
0347-0520
- Publication type
Article
- DOI
10.1111/j.1467-9442.2009.01588.x