De-Globalization, Welfare State Reforms and Labor Market Outcomes

Hassan Molana, Catia Montagna and George Onwordi

IMF Economic Review, 2021, vol. 69, issue 4, No 2, 624-655

Abstract: Abstract Within an open economy framework characterized by vertical linkages in production, and search frictions with two-sided heterogeneity in the labor market, raising trade barriers is shown to increase unemployment across skill levels and to reduce labor market participation and aggregate income. These effects are not necessarily moderated by maintaining frictionless mobility of capital across borders. We find that a flexicurity reform of a liberal welfare state can dampen the adverse effects of de-globalization.

JEL-codes: F16 F6 (search for similar items in EconPapers)
Date: 2021
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Working Paper: De-globalisation, welfare state reforms and labour market outcomes (2020)
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DOI: 10.1057/s41308-021-00150-8

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