Two-Way Outsourcing, International Migration, and Wage Inequality

Morihiro Yomogida and Laixun Zhao
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Morihiro Yomogida: Faculty of Economics, Sophia University, Japan

No 241, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper develops a general equilibrium model with a vertical production structure to examine the relationship between offshore outsourcing and international migration,especially emphasizing their effects on the wages of skilled and unskilled workers. Two-way outsourcing (simultaneous insourcing and outsourcing) in skilled-labor intensive services arises due to product differentiation and scale economies, and outsourcing in unskilled-labor intensive processing occurs because of factor endowment differences. The tractability of the model allows us to rank outsourcing and migration, according to the wages of both types of workers. Finally, we also analyze under what conditions outsourcing and international migration are complements or substitutes.

JEL-codes: F11 F12 F16 F22 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2009-04
New Economics Papers: this item is included in nep-bec, nep-dev, nep-lab and nep-mig
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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp241.pdf First version, 2009 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:241

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