The elasticity of substitution and the sector bias of International Outsourcing: Solving the puzzle

Arbeitspapier

Considering the sector bias of International Outsourcing within a 2x2 framework, four different scenarios appear. Each industry can either relocate its high or its low skill intensive production fragment. Traditionally, depending on the superiority of a wage vs. an outsourcing-effect, general equilibrium effects of two scenarios are assumed to be ambiguous. Applying a formal duality approach and a calibration exercise for the German economy, this contribution shows that a focus on the elasticity of substitution can solve the puzzle. With the elasticity exceeding a critical value, unambiguous results in all four scenarios appear, supporting the sector bias of International Outsourcing.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Diskussionspapier ; No. 88

Classification and Topics

• Classification: Wirtschaft ; Trade and Labor Market Interactions ; Open Economy Macroeconomics ; Aggregate Factor Income Distribution
• Subject: International Outsourcing ; Sector Bias ; Elasticity of Substitution ; Offshoring ; Outsourcing ; Auslandsproduktion ; Sektorale Beschäftigungsstruktur ; Hochqualifizierte Arbeitskräfte ; Ungelernte Arbeitskräfte ; Substitutionselastizität ; Theorie ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Horgos, Daniel
• Event: Veröffentlichung
• (who): Helmut-Schmidt-Universität - Universität der Bundeswehr Hamburg, Fächergruppe Volkswirtschaftslehre
• (where): Hamburg
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/38727
• URN: urn:nbn:de:gbv:705-opus-19193
• Last update: 10.03.2025, 11:46 AM CET