Logo
Munich Personal RePEc Archive

Anti-Trade Agitation and Distribution-Neutral Tax Policy- An Elementary Framework

Marjit, Sugata (2016): Anti-Trade Agitation and Distribution-Neutral Tax Policy- An Elementary Framework.

WarningThere is a more recent version of this item available.
[img]
Preview
PDF
MPRA_paper_73110.pdf

Download (184kB) | Preview

Abstract

The recent Brexit episode is being interpreted in some quarters as an anti-globalisation backlash. Free trade does not promise gains for all without a proper compensating mechanism that allows winners to bribe the losers. Also standard prediction of trade theory does point towards increasing wage inequality for the relatively skill abundant developed world. Theoretical discussion on compensating mechanism that addresses inequality is rare in trade literature. In a simple HOS model we consider tax policies that keep the pre-trade degree of inequality unchanged between skilled and unskilled workers. We discuss the problem of existence of such an inequality-neutral tax rate that generates a positive increment in the after tax skilled wage. Existence of such a mechanism is contingent on the initial degree of inequality and is independent of whether the tax is progressive or proportional.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.