Redistribution policy and offshoring in general equilibrium

Konferenzbeitrag

We look at the effect of domestic redistribution policy on offshoring in an asymmetric two country model of monopolistic competition, heterogeneous firms and occupational choice. The redistribution scheme is modeled by a combination of a progressive income tax and a lump-sum transfer. We find that the redistribution scheme lowers the degree of globalization measured by the share of offshoring firms in the economy. The intuition for this result is straightforward. The progressive income tax changes the factor allocation in the economy making it more attractive to become a worker. This leads to downward pressure on the domestic wage and thereby to a fall in the cost advantage of the host country. Changes in the domestic tax rate therefore affect the domestic economy not only directly but also via changes in the amount of offshoring. This has important implications both for aggregate income and for inequality.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Trade and Labor Market Interactions ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
• Thema: Offshoring ; Income Inequality ; Redistribution ; Heterogeneous firms

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kohl, Miriam ; Naumann, Fabrice
• Ereignis: Veröffentlichung
• (wer): ZBW - Leibniz Information Centre for Economics
• (wo): Kiel, Hamburg
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/242385
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ