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A model of wage and employment effects of service offshoring

Author

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  • Martin Tobal

Abstract

This paper develops a two-sector model of trade in goods and intermediate tasks that differ in tradability and skill intensity. A skill-abundant country with high productivity is shown to offshore more unskilled tasks than skilled tasks, without relying on a particular correlation structure between tradability and skill intensity. With putty-clay technology that allows retraining in the long run, transition from the non-offshoring to the offshoring equilibrium generates wage and employment effects that switch from negative to positive as tradability declines, with the switches occurring at a higher degree of tradability for skilled tasks. This is consistent with the empirical literature.

Suggested Citation

  • Martin Tobal, 2019. "A model of wage and employment effects of service offshoring," Canadian Journal of Economics, Canadian Economics Association, vol. 52(1), pages 303-338, February.
    • Handle: RePEc:cje:issued:v:52:y:2019:i:1:p:303-338
    DOI: 10.1111/caje.12373
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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.
    2. Michael Frenkel & Ngoc Tuyet Ngo, 2024. "Service offshoring and its impacts on wages: An occupation‐oriented analysis of Germany," The World Economy, Wiley Blackwell, vol. 47(4), pages 1615-1641, April.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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