Offshoring domestic jobs

Hartmut Egger (), Udo Kreickemeier and Jens Wrona

Journal of International Economics, 2015, vol. 97, issue 1, 112-125

Abstract: We develop a two-country general equilibrium model, in which heterogeneous firms offshore routine tasks to a low-wage host country. In the presence of fixed costs for offshoring the most productive firms self-select into offshoring, which leads to a reallocation of domestic labor towards less productive uses if offshoring costs are high. As a consequence domestic welfare may fall. The reallocation effect is reversed and domestic welfare rises if offshoring costs are low. The aggregate income distribution, comprising wages and entrepreneurial incomes, becomes more unequal with offshoring.

Keywords: Offshoring; Heterogeneous firms; Income inequality (search for similar items in EconPapers)
JEL-codes: F12 F16 F23 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199615000641
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Offshoring Domestic Jobs (2013)
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: https://EconPapers.repec.org/RePEc:eee:inecon:v:97:y:2015:i:1:p:112-125

DOI: 10.1016/j.jinteco.2015.03.010

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().