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International Capital Mobility in the Presence of Unemployment Insurance
Author(s) -
Geide–Stevenson Doris
Publication year - 2003
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00377
Subject(s) - unemployment , economics , capital (architecture) , welfare , layoff , labour economics , incentive , capital accumulation , capital deepening , capital formation , financial capital , macroeconomics , human capital , microeconomics , economic growth , market economy , archaeology , history
The paper develops a general–equilibrium model with layoff unemployment to examine the effect of different unemployment insurance policies on international capital mobility. Conditions are derived under which capital will flow to the high–benefit country. Incentives for international capital movements are unaffected by how the burden of financing unemployment benefits is distributed between workers and firms. It is shown that capital outflows might have positive welfare effects for workers. This contrasts with results from standard models of international factor movements.