A model of wage and employment effects of service offshoring

Martin Tobal

Canadian Journal of Economics, 2019, vol. 52, issue 1, 303-338

Abstract: This paper develops a two-sector model of trade in goods and intermediate tasks that differ in tradability and skill intensity. A skill-abundant country with high productivity is shown to offshore more unskilled tasks than skilled tasks, without relying on a particular correlation structure between tradability and skill intensity. With putty-clay technology that allows retraining in the long run, transition from the non-offshoring to the offshoring equilibrium generates wage and employment effects that switch from negative to positive as tradability declines, with the switches occurring at a higher degree of tradability for skilled tasks. This is consistent with the empirical literature.

JEL-codes: F16 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: A Model of Wage and Employment Effects of Service Offshoring (2015)
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