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Title:The elasticity of substitution and the sector bias of International Outsourcing: Solving the puzzle PDF Logo
Authors:Horgos, Daniel
Issue Date:2009
Series/Report no.:Diskussionspapier // Helmut-Schmidt-Universität, Universität der Bundeswehr Hamburg, Fächergruppe Volkswirtschaftslehre 88
Abstract: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.
Subjects:International Outsourcing
Sector Bias
Elasticity of Substitution
JEL:F16
F41
E25
Persistent Identifier of the first edition:urn:nbn:de:gbv:705-opus-19193
Document Type:Working Paper
Appears in Collections:Diskussionspapiere, Fächergruppe VWL, Helmut-Schmidt-Universität

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