Low-skill offshoring and welfare compensation policies
Author
Agnese, Pablo
Hromcová, Jana
Publication date
2016ISSN
0264-9993
Abstract
We analyze the effects of low-skill offshoring on welfare. In the context of a matching model with different possible equilibria we discuss three alternative policies that could potentially outweigh the negative welfare effects of offshoring, namely, a change of the unemployment benefits, labor market flexibility, and a progressive tax structure. Our calibrations for the German economy suggest that increased flexibility can bring low-skill workers to pre-offshoring welfare levels, something that cannot be accomplished by meddling with the unemployment benefits scheme or a more progressive tax structure. In addition, we find that a full compensation can be achieved by an upgrading of low-skill workers, its size depending on the type of equilibrium involved. In sum, our analysis gives support to labor market flexibility and upgrading by education as best therapies for offshoring.
Document Type
Article
Document version
Published version
Language
English
Subject (CDU)
33 - Economics. Economic science
Keywords
Economia
Economía
Economy
Pages
18
Publisher
Elsevier
Collection
52; Part B
Is part of
Economic Modelling
Citation
Agnese, Pablo; Hromcová, Jana. Low-skill offshoring and welfare compensation policies. Economic Modelling, 2016, 52(Part B), p. 408-426. Disponible en: <https://www.sciencedirect.com/science/article/abs/pii/S0264999315002692>. Fecha de acceso: 26 feb. 2024. DOI: 10.1016/j.econmod.2015.09.022
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Rights
© 2015 Elsevier B.V. All rights reserved.