Offshoring: General Equilibrium Effects on Wages, Production and Trade

Richard Baldwin and Frédéric Robert-Nicoud

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: A simple model of offshoring is used to integrate the complex gallery of results that exist in thetheoretical offshoring/fragmentation literature. The paper depicts offshoring as 'shadowmigration' and shows that this allows straightforward derivation of the general equilibriumeffects on prices, wages, production and trade (necessary and sufficient conditions are provided).We show that offshoring requires modification of the four HO theorems, so econometricians whoignore offshoring might reject the HO theorem when a properly specified version held in the data.We also show that offshoring is an independent source of comparative advantage and can lead tointra-industry trade in a Walrasian setting.

Keywords: Offshoring; Shadow migration; Inter-industry trade; Intra-industry trade; Tradetheorems (search for similar items in EconPapers)
JEL-codes: F02 F12 L22 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-int
Date: 2007-05
View list of references View citations in EconPapers

Downloads: (external link)
http://cep.lse.ac.uk/pubs/download/dp0794.pdf (application/pdf)

Related works:
Working Paper: Offshoring: General Equilibrium Effects on Wages, Production and Trade (2007)
Working Paper: Offshoring: General Equilibrium Effects on Wages, Production and Trade (2007)
Working Paper: Offshoring: General Equilibrium Effects on Wages, Production and Trade (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cep:cepdps:dp0794

Access Statistics for this paper

More papers in CEP Discussion Papers from Centre for Economic Performance, LSE
Series data maintained by ().