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Offshoring and Occupational Specificity of Human Capital

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  • Ritter, Moritz

Abstract

This paper develops a dynamic general equilibrium model in which workers acquire human capital specific to the task they complete. The dynamic nature of the model allows for differentiation between short and long run effects of offshoring on productivity and labour market outcomes. The welfare effects of increased offshoring are unambiguously positive; their magnitude depends on the difference between autarky and world relative prices, but not on the skill-content of offshored and inshored tasks. For reasonable terms of trade, the steady state welfare gains are found to be between 1.8% and 4% in the calibrated model. The distribution of the gains from trade critically depends on the time horizon: in the short term, workers with human capital specific to the inshored occupations gain, while workers with human capital specific to the offshored occupations lose. In the long run, the gains from trade are equally distributed among ex-ante identical agents.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19671.

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Date of creation: 30 Dec 2009
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Handle: RePEc:pra:mprapa:19671

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Keywords: Offshoring; Sectoral Labour Reallocation; Human Capital;

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  31. repec:spo:wpecon:info:hdl:2441/8904 is not listed on IDEAS
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Cited by:
  1. Kondo, Illenin O., 2013. "Trade Reforms, Foreign Competition, and Labor Market Adjustments in the U.S," International Finance Discussion Papers 1095, Board of Governors of the Federal Reserve System (U.S.).
  2. Erhan Artuç & Germán Bet & Irene Brambilla & Guido Porto, 2013. "Trade Shocks and Factor Adjustment Frictions: Implications for Investment and Labor," Department of Economics, Working Papers 101, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.

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