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Offshoring, Welfare, and Flexibility in the Context of US Protectionism

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  • Pablo Agnese
  • Jana Hromcová

Abstract

We reexamine the effects of offshoring in the US economy in the aftermath of the 2008 crisis. We use a matching model with endogenous adjustment of educational skills while distinguishing between offshoring of high and low-skill activities. We first show that offshoring leads to a restructuring of the economy through a change in the wage premium where overall welfare is improved. Moreover, in a policy exercise, we show that, if offshoring were to be opposed by a protectionist agenda, the resulting welfare losses could be counterbalanced by increased labor flexibility.

Suggested Citation

  • Pablo Agnese & Jana Hromcová, 2021. "Offshoring, Welfare, and Flexibility in the Context of US Protectionism," International Economic Journal, Taylor & Francis Journals, vol. 35(4), pages 391-410, October.
    • Handle: RePEc:taf:intecj:v:35:y:2021:i:4:p:391-410
    DOI: 10.1080/10168737.2021.1971281
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