Trade in tasks: Revisiting the wage and employment effects of offshoring

Arbeitspapier

We revisit Grossman and Rossi-Hansberg's (2008) famous result, that under certain conditions offshoring of low-skilled labor tasks raises the domestic wage for low-skilled workers. Our re-examination features a less benign environment where Rybczynski-type reallocation of factors to absorb offshoring-induced job displacement is ruled out. We allow for simultaneous offshoring of both skilled and unskilled labor, and we derive new results on the role of factor-bias in offshoring, identifying conditions under which offshoring has a "lifiting-all-boats" effect benefitting all workers. Extending our analysis to a frictional labor market with equilibrium unemployment due to costly matching, we demonstrate that under these same conditions offshoring is also associated with rising employment.

Object Details

• ISBN: 978-3-86304-319-3
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DICE Discussion Paper ; No. 320

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Trade and Labor Market Interactions ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Offshoring ; Trade in Tasks ; Wages ; Unemployment ; Search and Matching

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kohler, Wilhelm ; Wrona, Jens
• Event: Veröffentlichung
• (who): Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
• (where): Düsseldorf
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/200976
• Last update: 10.03.2025, 11:42 AM CET