Offshoring and unemployment: the role of search frictions and labor mobility

Arbeitspapier

In a two-sector, general-equilibrium model with labor-market search frictions, we find that wage increases and sectoral unemployment decreases upon offshoring in the presence of perfect intersectoral labor mobility. If, as a result, labor moves to the sector with the lower (or equal) vacancy costs, there is an unambiguous decrease in economywide unemployment. With imperfect intersectoral labor mobility, unemployment in the offshoring sector can rise, with an unambiguous unemployment reduction in the non-offshoring sector. Imperfect labor mobility can result in a mixed equilibrium in which only some firms in the industry offshore, with unemployment in this sector rising.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4136

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Trade and Labor Market Interactions ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Trade ; offshoring ; search ; unemployment ; Offshoring ; Produktivität ; Arbeitsuche ; Informationskosten ; Arbeitslosigkeit ; Arbeitsmobilität ; Allgemeines Gleichgewicht ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mitra, Devashish ; Ranjan, Priya
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35439
• URN: urn:nbn:de:101:1-20090513346
• Last update: 10.03.2025, 11:42 AM CET