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Trading Tasks: A Simple Theory of Offshoring
- American Economic Review
"... We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. I ..."
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Cited by 169 (3 self)
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We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. In the light of this effect, reductions in the cost of trading tasks can generate shared gains for all domestic factors, in contrast to the distributional conflict that typically results from reductions in the cost of trading goods. (JEL F11, F16) The nature of international trade is changing. For centuries, trade mostly entailed an exchange of goods. Now it increasingly involves bits of value being added in many different locations, or what might be called trade in tasks. Revolutionary advances in transportation and communications technology have weakened the link between labor specialization and geographic concentration, making it increasingly viable to separate tasks in time and space. When instructions can be delivered instantaneously, components and unfinished goods can be moved quickly and cheaply, and the output of many tasks can be conveyed electronically, firms can take advantage of factor cost disparities in different countries without sacrificing the gains from specialization. The result
International Outsourcing and Factor Prices with Multistage Production
- ECONOMIC JOURNAL
, 2004
"... We develop a dual representation of the technology of international fragmentation for an industry using 2 factors in a continuum of stages. We then derive a generalised factor price frontier which incorporates an endogenous adjustment of the margin fragmentation. Using this frontier in a 2×2 general ..."
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Cited by 76 (4 self)
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We develop a dual representation of the technology of international fragmentation for an industry using 2 factors in a continuum of stages. We then derive a generalised factor price frontier which incorporates an endogenous adjustment of the margin fragmentation. Using this frontier in a 2×2 general equilibrium model, we investigate the role of outsourcing in the adjustment to a decline in the final output price of the multistage industry, and the attendant factor price effects. We also explore the implications of an improved technology of international fragmentation on the margin of fragmentation and on domestic factor prices.
The Rise of Offshoring: It’s Not Wine for Cloth Anymore
, 2006
"... comments and discussion, to Gary DeTurck for research assistance, and to David Autor for graciously providing ..."
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Cited by 16 (0 self)
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comments and discussion, to Gary DeTurck for research assistance, and to David Autor for graciously providing
INTERNATIONAL OUTSOURCING AND THE DEMAND FOR SKILLS
"... This paper explores empirically the impact of international outsourcing on the demand for skills in 4 selected EU countries. A model of variable cost and factor demand functions for different skill levels and imported as well as domestic materials is set up. International outsourcing is treated dire ..."
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Cited by 2 (0 self)
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This paper explores empirically the impact of international outsourcing on the demand for skills in 4 selected EU countries. A model of variable cost and factor demand functions for different skill levels and imported as well as domestic materials is set up. International outsourcing is treated directly as a substitution process between labour of different skills (tasks) and imported inputs. The impact of international outsourcing on labour is measured by the cross price elasticities. The impact of technical change is measured by quasi-fixed capital stock (measured according to the EUKLEMS methodology) and a linear trend. The indirect impact of international outsourcing- determined by the consequences of the cost savings impact of outsourcing- is also taken into account.
Offshoring: Why do stories differ
- The EU and Emerging Markets, volume 12 of European Community Studies Association of Austria Publication Series
, 2009
"... An electronic version of the paper may be downloaded • from the SSRN website: www.SSRN.com • from the RePEc website: www.RePEc.org • from the CESifo website: Twww.CESifo-group.org/wp T ..."
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Cited by 2 (0 self)
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An electronic version of the paper may be downloaded • from the SSRN website: www.SSRN.com • from the RePEc website: www.RePEc.org • from the CESifo website: Twww.CESifo-group.org/wp T
of Medium-skill Jobs, Polarization, and Productivity Effect: Implications for Wages and Low-skill
"... Die ZBW räumt Ihnen als Nutzerin/Nutzer das unentgeltliche, räumlich unbeschränkte und zeitlich auf die Dauer des Schutzrechts beschränkte einfache Recht ein, das ausgewählte Werk im Rahmen der unter ..."
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Die ZBW räumt Ihnen als Nutzerin/Nutzer das unentgeltliche, räumlich unbeschränkte und zeitlich auf die Dauer des Schutzrechts beschränkte einfache Recht ein, das ausgewählte Werk im Rahmen der unter
of LaborLabor Market Effects of Trade and FDI: Recent Advances and Research Gaps
, 2010
"... Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international resear ..."
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Cited by 1 (0 self)
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Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion.
Trade and Integration Team
, 2011
"... bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Produced by the Research Support Team ..."
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bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Produced by the Research Support Team
Wage inequality in trade-in-tasks models
"... Abstract Recent trade-in-tasks models suggest that relative low-skill wages (in rich high-skill abundant countries) may increase when low-skill tasks are offshored. However, using numerical simulations of these models we find that wage inequality is increasing for almost all endowment combinations ..."
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Abstract Recent trade-in-tasks models suggest that relative low-skill wages (in rich high-skill abundant countries) may increase when low-skill tasks are offshored. However, using numerical simulations of these models we find that wage inequality is increasing for almost all endowment combinations (i.e. relative country sizes). The only exception is when the country is relatively small and offshoring levels are moderate or high. These results are robust to different offshoring cost parameters, factor production shares, elasticities of substitution, industryspecific offshoring costs, and different offshoring stages. Thus, the example portrayed in Grossman and
