EconPapers    
Economics at your fingertips  
 

Offshoring, Mismatch, and Labor Market Outcomes

David Arseneau and Brendan Epstein ()

MPRA Paper from University Library of Munich, Germany

Abstract: We study the role of labor market mismatch in the adjustment to a trade liberalization that results in the offshoring of high-tech production. Our model features two-sided heterogeneity in the labor market: high- and low-skilled workers are matched in a frictional labor market with high- and low-tech frms. Mismatch employment occurs when high-skilled workers choose to accept a less desirable job in the low-tech industry. The main result is that this type of job displacement is actually benefcial for the labor market in the country doing the o¤shoring. The reason is that mismatch allows this economy to reallocate domestic high-skilled labor across both high- and low-tech industries. In doing so, this reallocation dampens both the increase in the aggregate unemployment rate and the decline in aggregate wages that come as a consequence of shifting domestic production abroad. From a policy perspective, this result is perhaps counter-intuitive because it suggests that some degree of job dislocation is actually desirable as it helps facilitate adjustment in the labor market following a trade liberalization.

Keywords: search and matching; unemployment; vacancies; trade. (search for similar items in EconPapers)
JEL-codes: E24 F16 J63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-int and nep-mac
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/88691/1/Offshoring ... 0Outcomes%202016.pdf original version (application/pdf)

Related works:
Working Paper: Offshoring, Mismatch, and Labor Market Outcomes (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:88691

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2019-09-04
Handle: RePEc:pra:mprapa:88691