Trade liberalization and compensation

• 成果类型: Article
• 署名作者: Davidson, Carl; Matusz, Steven J.
• 署名单位: Michigan State University; University of Nottingham
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/j.1468-2354.2006.00394.x
• 发表日期: 2006
• 页码: 723-747
• 关键词: ADJUSTMENT ASSISTANCE; pareto gains

摘要

Liberalization harms some groups while generating aggregate benefits. We consider various labor market policies that might be used to compensate those who lose from freer trade. Our goal is to find the policy that compensates each group of losers at the lowest cost to the economy. We argue that wage subsidies should be used to compensate those who bear the adjustment costs triggered by liberalization whereas employment subsidies should be used to compensate those who remain trapped in the previously protected sector. Our analysis indicates that the cost of compensation is low, provided that the right policy is used.