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Managerial versus Production Wages: Offshoring, Country Size, and Endowments

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  • Sebastian Benz
  • Wilhelm Kohler

Abstract

We explore the role of trade in differentiated final goods as well as offshoring of tasks for inequality both within and between countries, emphasizing the distinction between managerial and production labour. We extend Grossman and RossiHansberg (2012), where task trade is driven by external economies of scale, by considering asymmetric endowments. Identifying possible equilibrium patterns of task trade, we find little scope for twoway trade if endowments are asymmetric. Our numerical simulations identify nonmonotonicities between the level of offshoring and measures of withincountry as well as betweencountry inequality.

Suggested Citation

  • Sebastian Benz & Wilhelm Kohler, 2014. "Managerial versus Production Wages: Offshoring, Country Size, and Endowments," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 250-271, February.
    • Handle: RePEc:cje:issued:v:47:y:2014:i:1:p:250-271
    DOI: 10.1111/caje.12073
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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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