Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103939
Authors: 
Agnese, Pablo
Hromcová, Jana
Year of Publication: 
2014
Series/Report no.: 
Düsseldorf Working Papers in Applied Management and Economics 30
Abstract: 
We analyze the effects of low-skill workers offshoring on the welfare of the economy. In the context of a matching model with different possible equilibria, we discuss two policies that could potentially outweigh the negative welfare efffects of offshoring, namely, an increase of the unemployment benefits and the exibilization of the labor market. Our results suggest that, while both policy instruments can theoretically bring the economy back to previous welfare levels, careful thought should be given to the practicability of either measure. In particular, it would take a major increase of the unemployment benefits but only a small reduction in the vacancy cost to compensate for the negative welfare effects of offshoring. In addition, we also find that the compensation can be achieved by an upgrading of the low-skill workers that varies with the equilibria.
Subjects: 
Offshoring
Welfare
Unemployment Benefits
Labor Market Flexibility
Upgrading
JEL: 
F66
J68
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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