De-Globalization, Welfare State Reforms and Labor Market Outcomes

Hassan Molana, Catia Montagna (Lead / Corresponding author), George E. Onwordi

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

Within an open economy framework characterized by vertical linkages in production, and search frictions with two-sided heterogeneity in the labor market, raising trade barriers is shown to increase unemployment across skill levels and to reduce labor market participation and aggregate income. These effects are not necessarily moderated by maintaining frictionless mobility of capital across borders. We find that a flexicurity reform of a liberal welfare state can dampen the adverse effects of de-globalization.

Original languageEnglish
Pages (from-to)624-655
Number of pages32
JournalIMF Economic Review
Volume69
Early online date25 Oct 2021
DOIs
Publication statusPublished - Dec 2021

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