Offshoring, matching, and income inequality

Jaerim Choi ()

Journal of Mathematical Economics, 2023, vol. 106, issue C

Abstract: This paper develops a matching framework of offshoring in which offshoring is defined as cross-country matching between workers and managers with complementary production technology. We study the distributional effects of offshoring by embedding the matching framework in a two-country, two-task model in which workers and managers possess a continuum of skills. Offshoring alters the matching mechanism, changes the span of control, and thereby influences inequality through differential distributional impacts between-task and within-task in each country. We then introduce an endogenous task choice into the model and show that offshoring changes the occupational choice mechanism, which feeds through into distributional consequences. In one case with an endogenous task choice, offshoring leads all workers to match with better managers, thereby increasing within-worker inequality in both countries. This outcome provides new insight into the distributional consequences of offshoring.

Keywords: Offshoring; Matching; Span of control; Inequality (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304406823000393
Full text for ScienceDirect subscribers only

Related works:
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:mateco:v:106:y:2023:i:c:s0304406823000393

DOI: 10.1016/j.jmateco.2023.102846

Access Statistics for this article

Journal of Mathematical Economics is currently edited by Atsushi (A.) Kajii

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