Premium
Second Best Redistributive Policies: The Case Of International Trade
Author(s) -
Guesnerie Roger
Publication year - 2001
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/1097-3923.00053
Subject(s) - economics , redistribution (election) , equity (law) , normative , work (physics) , production (economics) , value (mathematics) , microeconomics , gains from trade , public economics , international economics , free trade , mechanical engineering , philosophy , epistemology , machine learning , politics , political science , law , engineering , computer science
The paper presents a brief review of recent work that focuses on the normative economics of international trade. In a Heckscher–Ohlin‐like economy, with skilled and unskilled workers, the available redistributive tools (that include income taxation) are not powerful enough to allow the separation of efficiency and equity issues, and “production efficiency” is no longer desirable. At a social optimum that calls for redistribution toward the unskilled workers, the social value of the unskilled intensive good is necessarily smaller than its production price. This finding allows us to unify existing results and suggests conjectures.