Immigration and outsourcing: a general equilibrium analysis

Subhayu Bandyopadhyay and Howard Wall

No 2005-058, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We analyze the effects of outsourcing in the presence of a minimum wage by presenting a general-equilibrium model with an oligopolistic export sector and a competitive import-competing sector. An outsourcing tax is politically popular because it switches jobs to unemployed natives. It is also economically sound because it raises national income. An export subsidy may or may not be justified on welfare grounds. Increased international competition has no effect on the level of outsourcing, but the direction of its effect on unemployment and national income depends on the relative factor intensities of the two sectors.

Keywords: Immigrants; Labor market; Contracting out (search for similar items in EconPapers)
Date: 2007
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Related works:
Journal Article: Immigration and Outsourcing: A General‐Equilibrium Analysis (2010)
Working Paper: Immigration and Outsourcing: A General Equilibrium Analysis (2005)
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DOI: 10.20955/wp.2005.058

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