Managerial versus Production Wages: Offshoring, Country Size and Endowments

Sebastian Benz and Wilhelm Kohler

No 3292, CESifo Working Paper Series from CESifo

Abstract: In this paper, we explore the role of trade in differentiated final goods as well offshoring of tasks for inequality both within and between countries. We emphasize the distinction between managerial and production labor. Production labor is assumed to be a variable input composed of tradable tasks, while managerial labor is a fixed, non-tradable input. We use a 2-country model recently developed by Grossman & Rossi-Hansberg (2010b) that highlights trade in production task, driven by Marshallian economies of scale. We analyze country size and relative endowment effects on the managerial wage premium as well as on international inequality measured in income per head. We compare these effects in a world where trade is restricted to differentiated final goods with a world with trade in both final goods and production tasks.

Keywords: offshoring; economies of scale; income distribution; international inequality (search for similar items in EconPapers)
JEL-codes: F12 F16 F23 (search for similar items in EconPapers)
Date: 2010
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Related works:
Journal Article: Managerial versus Production Wages: Offshoring, Country Size, and Endowments (2014)
Journal Article: Managerial versus Production Wages: Offshoring, Country Size, and Endowments (2014)
Working Paper: Managerial versus production wages: Offshoring, country size and endowments (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3292

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