Offshoring in Developing Countries: Labor Market Outcomes, Welfare, and Policy
Subhayu Bandyopadhyay (),
Arnab Basu (),
Nancy Chau () and
Devashish Mitra ()
No 2016-11, Working Papers from Federal Reserve Bank of St. Louis
Does a reduction in offshoring cost benefit workers in the world's factories in developing countries? Using a parsimonious two-country model of offshoring we find very nuanced results. These include cases where wages monotonically improve, worsen, as well as where wages exhibit an inverted U-shaped relationship with the offshoring cost. We identify qualitative conditions under which these relationships hold. Since global welfare always rises with an improvement in offshoring technology, we find that there is a role for a wage tax or a minimum wage in the developing country. We derive the optimal levels of such policies.
Keywords: Wages; International Offshoring; Wage Tax; Minimum Wage (search for similar items in EconPapers)
JEL-codes: F11 F13 F16 F66 O19 O24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2016-05-31, Revised 2017-04-01
Note: Title changed.
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://research.stlouisfed.org/wp/2016/2016-011.pdf Full text (application/pdf)
https://dx.doi.org/10.20955/wp.2016.011 https://dx.doi.org/10.20955/wp.2016.011 (text/html)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2016-011
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Anna Oates ().