| Author Name | ICHIDA Toshihiro (Waseda University) |
|---|---|
| Creation Date/NO. | July 2015 15-E-083 |
| Research Project | Trade and Industrial Policies in a Complex World Economy |
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Abstract
Using a multiple-skill model of occupational choice, we study the trade-offs faced by a benevolent government that aims at Pareto improvement from trade liberalization via incentive-compatible compensating transfers. When the transfers are designed after some liberalization has been realized, the trade-off is between Pareto improvement and overcompensation. When agents anticipate future transfer schemes, the trade-off is between the size of aggregate production gains and the amount of overcompensation.
