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Time zones, shift working and international outsourcing

  • Matsuoka, Yuji
  • Fukushima, Marcelo
Registered author(s):

    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.

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    File URL: http://www.sciencedirect.com/science/article/B6W4V-5046MG0-1/2/3fab8045f385905f33523d228640ae03
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    Article provided by Elsevier in its journal International Review of Economics & Finance.

    Volume (Year): 19 (2010)
    Issue (Month): 4 (October)
    Pages: 769-778

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    Handle: RePEc:eee:reveco:v:19:y:2010:i:4:p:769-778
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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    1. Keith Head & Thierry Mayer & John Ries, 2007. "How Remote is the Offshoring Threat?," Working Papers 2007-18, CEPII research center.
    2. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    3. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2006. "Can deunionization lead to international outsourcing?
      [Führt der Rückzug der Gewerkschaften zur internationalen Auslagerung von Arbeitsplätzen?]
      ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2006-23, Social Science Research Center Berlin (WZB).
    4. Fukushima, Marcelo & Kikuchi, Toru, 2008. "A Simple Model of Trade with Heterogeneous Firms and Trade Policy," MPRA Paper 9573, University Library of Munich, Germany.
    5. Lanfranchi, Joseph & Ohlsson, Henry & Skalli, Ali, 2001. "COMPENSATING WAGE DIFFERENTIALS AND SHIFT WORK PREFERENCES. Evidence from France," Working Papers in Economics 55, University of Gothenburg, Department of Economics.
    6. 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.
    7. 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.
    8. Koskela, Erkki & Stenbacka, Rune, 2009. "Equilibrium unemployment with outsourcing under labour market imperfections," Labour Economics, Elsevier, vol. 16(3), pages 284-290, June.
    9. Marjit, Sugata, 2007. "Trade theory and the role of time zones," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 153-160.
    10. repec:ebl:ecbull:v:6:y:2006:i:15:p:1-10 is not listed on IDEAS
    11. Kostiuk, Peter F, 1990. "Compensating Differentials for Shift Work," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1054-75, October.
    12. Toru Kikuchi, 2009. "Time Zones as a Source of Comparative Advantage," Review of International Economics, Wiley Blackwell, vol. 17(5), pages 961-968, November.
    13. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October.
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