Redistributing Gains from Globalisation* |
| |
Authors: | Hartmut Egger Udo Kreickemeier |
| |
Affiliation: | 1. University of Bayreuth, DE‐95447 Bayreuth, Germany hartmut.egger@uni‐bayreuth.de;2. University of Tübingen, DE‐72074 Tübingen, Germany udo.kreickemeier@uni‐tuebingen.de |
| |
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. |
| |
Keywords: | Heterogeneous firms fair wages wage inequality unemployment trade liberalisation D31 F12 F15 F16 H25 |
|
|