Low-Skill Offshoring: Labor Market Policies and Welfare Effects

Internationales Outsourcing von gering qualifizierter Arbeit: Arbeitsmarktpolitik und Wohlfahrtseffekte

Pablo Agnese and Jana Hromcová

Duesseldorf Working Papers in Applied Management and Economics from Duesseldorf University of Applied Sciences

Abstract: We analyze the effects of low-skill workers offshoring on the welfare of the economy. In the context of a matching model with different possible equilibria, we discuss two policies that could potentially outweigh the negative welfare effects of offshoring, namely, an increase of the unemployment benefits and the flexibilization of the labor market. Our results suggest that, while both policy instruments can theoretically bring the economy back to previous welfare levels, careful thought should be given to the practicability of either measure. In particular, it would take a major increase of the unemployment benefits but only a small reduction in the vacancy cost to compensate for the negative welfare effects of offshoring. In addition, we also find that the compensation can be achieved by an upgrading of the low-skill workers that varies with the equilibria.

Keywords: Internationales Outsourcing; Offshoring; Wohlfahrt; Lohnersatzleistungen; Arbeitsmarktflexibilität; Höherqualifizierung; Offshoring; Welfare; Unemployment Benefits; Labor Market Flexibility; Upgrading (search for similar items in EconPapers)
JEL-codes: F66 J68 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Forschungsberichte des Fachbereichs Wirtschaft der Fachhochschule Duesseldorf, 2014,30 ; ISSN 1866-2722

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Related works:
Working Paper: Low-Skill Offshoring: Labor Market Policies and Welfare Effects (2014)
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