Wage inequality in trade-in-tasks models

Hugo Rojas-Romagosa

No 196, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: Recent trade-in-tasks models suggest that relative low-skill wages may increase when low-skill tasks are offshored. However, using extensive numerical simulations of these models we find that wage inequality is increasing for almost all endowment combinations when we use a broad range of parameter values and model specifications. The most common exception is when the country is relatively small and cannot affect international prices. In the case of relatively poor lowskill abundant countries, we find that offshoring is always welfare improving, but wage inequality effects are ambiguous. Finally, we find that a trade-intasks model with three skill-types can also account for wage polarization when we allow medium-skill tasks to be offshored.

JEL-codes: F11 F16 J31 (search for similar items in EconPapers)
Date: 2011-12
New Economics Papers: this item is included in nep-int, nep-lab and nep-lma
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Wage inequality in trade-in-tasks models (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:196

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