EconPapers    
Economics at your fingertips  
 

Competitive selection, trade, and employment: The strategic use of subsidies

Hassan Molana and Catia Montagna

Review of International Economics, 2018, vol. 26, issue 5, 1154-1177

Abstract: Within a heterogeneous‐firms model with endogenous labor supply, intra‐industry competitive selection is shown to affect the impact of wage (and entry) subsidies. Optimal uniform wage subsidies are always positive even though, by reducing industry selectivity, they lower average productivity. Because of international selection and fiscal externalities, noncooperative policies entail under‐subsidization of wages. Targeted (domestic‐only or export) wage subsidies are dominated from a welfare point of view by a uniform subsidy. While always having an opposite effect on average productivity, an optimal entry subsidy is shown to be less effective than an optimal uniform wage subsidy in raising employment and welfare.

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/roie.12354

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:reviec:v:26:y:2018:i:5:p:1154-1177

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0965-7576

Access Statistics for this article

Review of International Economics is currently edited by E. Kwan Choi

More articles in Review of International Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-10-09
Handle: RePEc:bla:reviec:v:26:y:2018:i:5:p:1154-1177