Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/207418
Authors: 
Agnese, Pablo
Hromcová, Jana
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12593
Abstract: 
We discuss the effects of offshoring on the labor market in a matching model with endogenous adjustment of educational skills. We carry out a comparative statics analysis and show that offshoring leads to a restructuring of the economy through skill-biased technical change (SBTC) where overall welfare is improved. In a policy exercise we show that, if offshoring were to be opposed by a protectionist agenda, labor market flexibility can bring about the same welfare gain. In addition, we offer an empirical analysis aimed at verifying the correlation be- tween offshoring and SBTC in US manufacturing industries in recent years. Our results show that different offshoring strategies affect SBTC differently. In particular, the evidence suggests that while high-skill offshoring strategies open the skill gap, low-skill offshoring strategies tend to work in the opposite direction.
Subjects: 
offshoring
skills
skill-biased technical change
JEL: 
F66
J64
F16
F17
Document Type: 
Working Paper

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