Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/35439
Authors: 
Mitra, Devashish
Ranjan, Priya
Year of Publication: 
2009
Series/Report no.: 
IZA discussion papers 4136
Abstract: 
In a two-sector, general-equilibrium model with labor-market search frictions, we find that wage increases and sectoral unemployment decreases upon offshoring in the presence of perfect intersectoral labor mobility. If, as a result, labor moves to the sector with the lower (or equal) vacancy costs, there is an unambiguous decrease in economywide unemployment. With imperfect intersectoral labor mobility, unemployment in the offshoring sector can rise, with an unambiguous unemployment reduction in the non-offshoring sector. Imperfect labor mobility can result in a mixed equilibrium in which only some firms in the industry offshore, with unemployment in this sector rising.
Subjects: 
Trade
offshoring
search
unemployment
JEL: 
F11
F16
J64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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