Offshoring of medium-skill jobs, polarization, and productivity effect: Implications for wages and low-skill unemployment

Ehsan Vallizadeh, Muysken J. and Thomas Ziesemer ()

No 2015-004, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: We examine the effects of endogenous offshoring on cost-efficiency, wages and unemployment in a task assignment model with skill heterogeneity. Exact conditions for the following insights are derived. The distributional effect of offshoring high- low-skill-intensive tasks is similar to unskilled- skill-biased technology changes, while offshoring medium-skill-intensive tasks induces wage polarization. Offshoring improves cost-efficiency through international task reallocation and puts a downward pressure on all wages through domestic skill-task reallocation. If elasticities of task substitution are low high, the downward pressure on wages in neighbouring skill segments is low high with a net effect of higher lower wages and employment.

Keywords: Trade and Labor Market Interactions; Globalization; Human resources; Employment; Human Capital; Skills; Occupational Choice; Labor Productivity; Unemployment (search for similar items in EconPapers)
JEL-codes: F16 F66 J21 J24 J64 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Offshoring of medium-skill jobs, polarization, and productivity effect: implications for wages and low-skill unemployment (2015)
Working Paper: Offshoring of Medium-skill Jobs, Polarization, and Productivity Effect: Implications for Wages and Low-skill Unemployment (2015)
Working Paper: Offshoring of Medium-skill Jobs, Polarization, and Productivity Effect: Implications for Wages and Low-skill Unemployment (2015)
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