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Offshoring and Migration in a World with Policy Spillovers

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  • Cosimo Beverelli
  • Gianluca Orefice
  • Nadia Rocha

Abstract

Using a trade in task model that extends the one of Ottaviano, Peri, and Wright (2010) to three coun- tries, we study the effects of immigration and offshoring costs on employment. Tasks can be performed by migrants, offshore workers or natives, with sorting along a continuum of task determined by cost- minimization. For two alternative specifications of the model - one in which the ordering of low-end and intermediate tasks is pinned down by worker characteristic and one in which it is pinned down by country characteristics - we derive testable predictions on ‘direct’, ‘domestic spillover’ and ‘international spillover’ effects of migration and offshoring costs on the number of migrants and the number of offshore workers. Direct effects refer to the impact of own migration (offshoring) costs on number of migrant (off- shore) workers. Domestic spillovers capture the effect of own migration (offshoring) costs on the number of offshore (migrant) workers. International spillovers refer to the direct effect of country j’s migration (offshoring) costs on country i’s migration (offshoring), and to the indirect effect of country j’s migration (offshoring) costs on country i’s offshoring (migration). Overall, we find strong support of negative direct effects, mild support for domestic spillover effects and very limited support for international spillover effect, leading to conclude that the second model specification is a better fit of the data. Two broad policy implications follow. First, host countries can affect the number of migrants by acting both on bilateral migration policies and on bilateral offshoring policies. Second, dejure discriminatory policies on migration or offshoring need not be defacto so.

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Bibliographic Info

Paper provided by Institut d'Economie et Econométrie, Université de Genève in its series Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva with number 11105.

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Length: 40 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:gen:geneem:11105

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Related research

Keywords: Trade in tasks; employment; spillover effects;

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References

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  1. Abdih, Yasser & Chami, Ralph & Dagher, Jihad & Montiel, Peter, 2012. "Remittances and Institutions: Are Remittances a Curse?," World Development, Elsevier, vol. 40(4), pages 657-666.
  2. Giovanni Peri & Chad Sparber, 2009. "Task Specialization, Immigration, and Wages," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 135-69, July.
  3. Maurice Kugler & Hillel Rapoport, 2005. "Skilled Emigration, Business Networks and Foreign Direct Investment," CESifo Working Paper Series 1455, CESifo Group Munich.
  4. Alan S. Blinder & Alan B. Krueger, 2013. "Alternative Measures of Offshorability: A Survey Approach," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages S97 - S128.
  5. Gianmarco I.P. Ottaviano & Giovanni Peri & Greg C. Wright, 2010. "Immigration, Offshoring and American Jobs," NBER Working Papers 16439, National Bureau of Economic Research, Inc.
  6. Antecol, Heather & Cobb-Clark, Deborah A. & Trejo, Stephen, 2001. "Immigration Policy and the Skills of Immigrants to Australia, Canada, and the United States," IZA Discussion Papers 363, Institute for the Study of Labor (IZA).
  7. Bandyopadhyay, Subhayu & Wall, Howard J., 2005. "Immigration and Outsourcing: A General Equilibrium Analysis," IZA Discussion Papers 1694, Institute for the Study of Labor (IZA).
  8. Javorcik, Beata S. & Ozden, Caglar & Spatareanu, Mariana & Neagu, Cristina, 2006. "Migrant networks and foreign direct investment," Policy Research Working Paper Series 4046, The World Bank.
  9. Barry R. Chiswick & Anh T. Le & Paul W. Miller, 2008. "How Immigrants Fare across the Earnings Distribution in Australia and the United States," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(3), pages 353-373, April.
  10. Wright, Greg C., 2014. "Revisiting the employment impact of offshoring," European Economic Review, Elsevier, vol. 66(C), pages 63-83.
  11. William W. Olney, 2008. "Do Firms Respond to Immigration?," Department of Economics Working Papers 2010-11, Department of Economics, Williams College, revised Jan 2011.
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