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WAGE SUBSIDY AND WELFARE IN DEVELOPING COUNTRIES

Hamid Beladi, Saibal Kar

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Abstract

This paper seeks to answer if wage subsidy to workers displaced due to trade reform raises welfare in a developing country. We use a general equilibrium model with non-specific factor inputs and trade liberalization as a policy variable. A combination of wage subsidy and tariff rate obtains the second-best welfare level. The theoretical result is new, policy-relevant and important in view of political-economy aspects of free trade in developing and transition countries.

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What this paper is about

This paper seeks to answer if wage subsidy to workers displaced due to trade reform raises welfare in a developing country. We use a general equilibrium model with non-specific factor inputs and trade liberalization as a policy variable. A combination of wage subsidy and tariff rate obtains the second-best welfare level. The theoretical result is new, policy-relevant and important in view of political-economy aspects of free trade in developing and transition countries.

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OpenAlex reports 3 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

This paper seeks to answer if wage subsidy to workers displaced due to trade reform raises welfare in a developing country. We use a general equilibrium model with non-specific factor inputs and trade liberalization as a policy variable. A combination of wage subsidy and tariff rate obtains the second-best welfare level. The theoretical result is new, policy-relevant and important in view of political-economy aspects of free trade in developing and transition countries.

Key concepts: Subsidy, Economics, Welfare, Wage, Developing country, Tariff, Free trade, International economics

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