abstract: 'This paper studies the implications of globalization for aggregate

  output and welfare when risk averse workers face the risk of

  unemployment. The impact of globalization on the welfare of workers and

  aggregate output depends on the degree of substitutability between

  domestic workers and imported inputs. When the degree of

  substitutability is high (low), then globalization reduces (increases)

  wages and increases (reduces) unemployment. Irrespective of the

  substitutability, free trade doesn''t maximize the aggregate output. A

  small tariff (import subsidy) increases aggregate output when the

  substitutability is low (high), however, it can exacerbate the

  distributional conflict. Domestic labor market policies such as

  unemployment benefits and severance payments can protect workers against

  labor income risk but the firing restrictions do not. Free trade is

  optimal when labor market policies provide insurance against

  unemployment. (C) 2016 Elsevier B.V. All rights reserved.'
affiliation: 'Ranjan, P (Corresponding Author), Univ Calif Irvine, Irvine, CA 92697
  USA.

  Ranjan, Priya, Univ Calif Irvine, Irvine, CA 92697 USA.'
author: Ranjan, Priya
author-email: pranjan@uci.edu
author_list:
- family: Ranjan
  given: Priya
da: '2023-09-28'
doi: 10.1016/j.jinteco.2016.08.005
eissn: 1873-0353
files: []
issn: 0022-1996
journal: JOURNAL OF INTERNATIONAL ECONOMICS
keywords: 'Offshoring; Unemployment; Endogenous job destruction; Severance

  payments; Unemployment benefits'
keywords-plus: 'UNEMPLOYMENT-INSURANCE; EMPLOYMENT PROTECTION; EQUILIBRIUM; INEQUALITY;

  JOBS'
language: English
month: NOV
number-of-cited-references: '34'
pages: 64-79
papis_id: ba905a2c1d1fa8ab2f04c730c17c8c07
ref: Ranjan2016globalizationrisk
times-cited: '1'
title: 'Globalization and risk averse workers: The roles of labor market and trade
  policies'
type: Article
unique-id: WOS:000390510100005
usage-count-last-180-days: '1'
usage-count-since-2013: '31'
volume: '103'
web-of-science-categories: Economics
year: '2016'