New Publication – Trade in tasks

New Publication “Trade in tasks: Revisiting the wage and employment effects of offshoring” by Jens Wrona, and Wilhelm Kohler (University of Tübingen) in the Canadian Journal of Economics.

Abstract:

We examine conditions under which offshoring of labour tasks raises domestic wages and employment. Existing literature emphasizes that absorption of job displacement through intersectoral reallocation of factors is a key requirement for this outcome, mostly assuming full employment. We develop a model featuring a less benign environment that rules out such reallocation and allows for equilibrium unemployment due to costly search and matching. Assuming offshoring of both high-skilled and low-skill ed labour tasks, we derive conditions under which offshoring benefits all workers in terms of both, wages and employment.