Offshoring tasks, yet creating jobs?

Wilhelm Kohler and Jens Wrona ()

No 12, University of Tübingen Working Papers in Business and Economics from University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics

Abstract: The policy debate views offshoring as job destruction. Theoretical models of offshoring mostly assume full employment. We develop a model of task trade that allows for equilibrium unemployment. In this model, there are two margins of adjustment. At the extensive margin, moving tasks offshore destroys jobs. At the intensive margin, due to higher productivity of labor in domestic tasks it creates jobs. Exploring these conditions in detail, we identify the potential of non-monotonic adjustment: Early stages of offshoring always lead to higher unemployment, while later stages may entail net job creation. We highlight this potential through numerical simulations.

Keywords: Offshoring; Trade in Tasks; Unemployment; Non-monotonicity (search for similar items in EconPapers)
JEL-codes: F11 F16 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-int and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Working Paper: Offshoring Tasks, yet Creating Jobs? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuewef:12

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