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

Arbeitspapier

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-skillintensive 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 neighboring skill segments is low (high) with a net effect of higher (lower) wages and employment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAB-Discussion Paper ; No. 7/2015

Classification and Topics

• Classification: Wirtschaft ; Trade and Labor Market Interactions ; Economic Impacts of Globalization: Labor ; Labor Force and Employment, Size, and Structure ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Task Assignment ; Offshoring ; Skills ; Cost-efficiency Effect ; Equilibrium Unemployment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Vallizadeh, Ehsan ; Muysken, Joan ; Ziesemer, Thomas
• Event: Veröffentlichung
• (who): Institut für Arbeitsmarkt- und Berufsforschung (IAB)
• (where): Nürnberg
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/108842
• Last update: 10.03.2025, 11:41 AM CET