Options
Outsourcing, Unemployment and Welfare Policy
Journal
Journal of International Economics
ISSN
0022-1996
Type
journal article
Date Issued
2009-02-05
Author(s)
Ribi, Evelyn
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.
Language
English
Keywords
Outsourcing
unemployment
social insurance
redistribution
HSG Classification
contribution to scientific community
Refereed
No
Publisher
Elsevier
Publisher place
Amsterdam
Volume
78
Number
1
Start page
168
End page
176
Pages
9
Subject(s)
Eprints ID
41122