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Trading Tasks: A Simple Theory of Offshoring

Gene M. Grossman and Esteban Rossi-Hansberg

American Economic Review, 2008, vol. 98, issue 5, 1978-97

Abstract: We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. In the light of this effect, reductions in the cost of trading tasks can generate shared gains for all domestic factors, in contrast to the distributional conflict that typically results from reductions in the cost of trading goods. (JEL F11, F16)

JEL-codes: F11 L23 L24 M11 (search for similar items in EconPapers)
Date: 2008
Note: DOI: 10.1257/aer.98.5.1978
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Citations: View citations in EconPapers (1222)

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Working Paper: Trading Tasks: A Simple Theory of Offshoring (2006) Downloads
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