Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46610
Authors: 
Benz, Sebastian
Kohler, Wilhelm
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper: Trade Policy 3292
Abstract: 
In this paper, we explore the role of trade in differentiated final goods as well offshoring of tasks for inequality both within and between countries. We emphasize the distinction between managerial and production labor. Production labor is assumed to be a variable input composed of tradable tasks, while managerial labor is a fixed, non-tradable input. We use a 2-country model recently developed by Grossman & Rossi-Hansberg (2010b) that highlights trade in production task, driven by Marshallian economies of scale. We analyze country size and relative endowment effects on the managerial wage premium as well as on international inequality measured in income per head. We compare these effects in a world where trade is restricted to differentiated final goods with a world with trade in both final goods and production tasks.
Subjects: 
offshoring
economies of scale
income distribution
international inequality
JEL: 
F12
F16
F23
Document Type: 
Working Paper

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