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Title:Learning on the Quick and Cheap: Gains from Trade through Imported Expertise PDF Logo
Authors:Markusen, James R.
Rutherford, Thomas F.
Issue Date:2005
Series/Report no.:Kieler Arbeitspapiere 1251
Abstract:Gains from productivity and knowledge transmission arising from the presence of foreign firms has received a good deal of empirical attention, but micro-foundations for this mechanism are weak . Here we focus on production by foreign experts who may train domestic unskilled workers who work with them. Gains from training can in turn be decomposed into two types: (a) obtaining knowledge and skills at a lower cost than if they are self-taught at home, (b) producing domestic skilled workers earlier in time than if they the domestic economy had to rediscover the relevant knowledge through ?reinventing the wheel?. We develop a three-period model in which the economy initially has no skilled workers. Workers can withdraw from the labor force for two periods of self study and then produce as skilled workers in the third period. Alternatively, foreign experts can be hired in period 1 and domestic unskilled labor working with the experts become skilled in the second period. We analyze how production, training, and welfare depend on two important parameters: the cost of foreign experts and the learning (or ?absorptive?) capacity of the domestic economy.
Subjects:learning
transmission mechanism
multinationals
imported experetise
JEL:F13
F23
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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