Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107080
Authors: 
Vallizadeh, Ehsan
Muysken, Joan
Ziesemer, Thomas
Year of Publication: 
4-Feb-2015
Series/Report no.: 
UNU-MERIT Working Papers 2015-004
Abstract: 
We examine the effects of endogenous offshoring on cost-efficiency, wages and unemployment in a taskassignment model with skill heterogeneity. Exact conditions for the following insights are derived. The distributional effect of offshoring (high-) low-skill-intensive tasks is similar to (unskilled-) skill-biased technology changes, while offshoring medium-skill-intensive tasks induces wage polarization. Offshoring improves cost-efficiency through international task reallocation and puts a downward pressure on all wages through domestic skill-task reallocation. If elasticities of task substitution are low (high), the downward pressure on wages in neighboring skill segments is low (high) with a net effect of higher (lower) wages and employment.
Subjects: 
Task Assignment
Offshoring
Skills
Cost-efficiency Effect
Equilibrium Unemployment
JEL: 
F16
F66
J21
J24
J64
Document Type: 
Working Paper

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