Globalization, Jobs, and Welfare: The Roles of Social Protection and Redistribution

Priya Ranjan ()
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Priya Ranjan: Department of Economics, University of California-Irvine
Authors registered in the RePEc Author Service: Priyaranjan Jha

No 141507, Working Papers from University of California-Irvine, Department of Economics

Abstract: This paper studies the welfare and policy implications of globalization when risk averse workers face the risk of unemployment. If the jobs performed by domestic workers can be easily substituted by imports, then globalization reduces wages and increases unemployment. In this situation, in the absence of any government intervention globalization not only reduces the welfare of workers but could reduce social welfare as well. Both unemployment benefits and severance payments can protect workers against labor income risk, but the latter enhances welfare more if job destruction is the source of unemployment. When optimal redistribution and social protection policies are in place, globalization necessarily improves social welfare.

Keywords: Offshoring; Unemployment; Endogenous job destruction; Severance payments; Unemployment benefits (search for similar items in EconPapers)
JEL-codes: F16 F66 F68 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2014-12
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Related works:
Working Paper: Globalization, Jobs, and Welfare: The Roles of Social Protection and Redistribution (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:irv:wpaper:141507

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