Cumulative causation, the welfare state and international specialisation

Hassan Molana, Catia Montagna

    Research output: Working paperDiscussion paper

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    Abstract

    We model a small open economy which produces a high-tech and a low-tech good and whose government pursues redistributive policies financed through distortionary taxation. With vertical linkages between sectors and with unionised labour markets, we analyse the effects of welfare state provision on: (1) the pattern of the country’s trade, (2) the depth of the division of labour within the economy, and (3) the country’s welfare. We show that an increase in the size of the welfare state might have positive effects on the country’s income and on the extent to which the country specialises in the high-tech sector.
    Original languageEnglish
    PublisherUniversity of Dundee
    Publication statusPublished - 2000

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.116
    ISSN (Print)1473-236X

    Keywords

    • Welfare state
    • Circular causation
    • International trade

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  • Cite this

    Molana, H., & Montagna, C. (2000). Cumulative causation, the welfare state and international specialisation. (Dundee Discussion Papers in Economics; No. 116). University of Dundee.