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A Model of Wage and Employment Effects of Service Offshoring

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  • Tobal Martín

Abstract

This article shows that a skill-abundant country with a relatively high productivity has larger incentives to offshore unskilled than skilled intensive tasks (services), even though no assumption on the correlation between the degree of tradability and skill-intensity of the tasks is made. Assuming putty-clay technology that locks labor into tasks in the short run, it is shown that service offshoring yields wage and employment effects in the long run. These effects switch from negative to positive as the degree of tradability declines, being the switch for a large degree of tradability in the case of the skilled intensive tasks. The results are consistent with an emerging empirical literature that studies the effects of service offshoring on wages and employment.

Suggested Citation

  • Tobal Martín, 2015. "A Model of Wage and Employment Effects of Service Offshoring," Working Papers 2015-10, Banco de México.
    • Handle: RePEc:bdm:wpaper:2015-10
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    Cited by:

    1. Daniel CHIQUIAR & Martín TOBAL & Renato YSLAS, 2019. "Measuring and understanding trade in service tasks," International Labour Review, International Labour Organization, vol. 158(1), pages 169-190, March.

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    More about this item

    Keywords

    Service offshoring; Trade in Tasks; Skill-intensity;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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