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Time zones, shift working and international outsourcing

Author

Listed:
  • Matsuoka, Yuji
  • Fukushima, Marcelo

Abstract

We build a trade model with two identical countries located in different time zones and one sector with intermediate differentiated goods produced in two successive stages. We introduce shift working disutility that raises night wage and firms that "virtually" outsource foreign labor. We found that firms only outsource if outsourcing costs are relatively low and shift disutility is high. When outsourcing occurs, it generates the highest level of welfare among production modes. Intermediate values of shift working disutility generate the lowest level of welfare. Outsourcing and domestic labor are substitutes at the firm level and complements at the economy level.

Suggested Citation

  • Matsuoka, Yuji & Fukushima, Marcelo, 2010. "Time zones, shift working and international outsourcing," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 769-778, October.
  • Handle: RePEc:eee:reveco:v:19:y:2010:i:4:p:769-778
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    References listed on IDEAS

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    1. Head, Keith & Mayer, Thierry & Ries, John, 2009. "How remote is the offshoring threat?," European Economic Review, Elsevier, vol. 53(4), pages 429-444, May.
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    6. Koskela, Erkki & Stenbacka, Rune, 2009. "Equilibrium unemployment with outsourcing under labour market imperfections," Labour Economics, Elsevier, vol. 16(3), pages 284-290, June.
    7. Kikuchi, Toru & Iwasa, Kazumichi, 2010. "A simple model of service trade with time zone differences," International Review of Economics & Finance, Elsevier, vol. 19(1), pages 75-80, January.
    8. Lanfranchi, Joseph & Ohlsson, Henry & Skalli, Ali, 2002. "Compensating wage differentials and shift work preferences," Economics Letters, Elsevier, vol. 74(3), pages 393-398, February.
    9. repec:ebl:ecbull:v:6:y:2006:i:15:p:1-10 is not listed on IDEAS
    10. Toru Kikuchi, 2009. "Time Zones as a Source of Comparative Advantage," Review of International Economics, Wiley Blackwell, vol. 17(5), pages 961-968, November.
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    12. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
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    Cited by:

    1. Mukherjee, Arijit & Tsai, Yingyi, 2013. "Multi-sourcing as an entry deterrence strategy," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 108-112.
    2. Noritsugu Nakanishi & Ngo Van Long, 2015. "The Distributional and Allocative Impacts of Virtual Labor Mobility across Time Zones through Communication Networks," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 638-662, August.
    3. Mandal, Biswajit & Marjit, Sugata & Nakanishi, Noritsugu, 2015. "Outsourcing, Factor Prices and Skill Formation in Countries with Non-overlapping Time Zones," MPRA Paper 68227, University Library of Munich, Germany.

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