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Offshoring and occupational specificity of human capital

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  • Moritz Ritter

    (Temple University)

Abstract

I document that workers in newly tradable service occupations possess more occupation-specific human capital and are more highly educated than workers in previously tradable occupations. Motivated by this observation, I develop a dynamic equilibrium model with labor market frictions and specific human capital to study the labor adjustment process after a trade shock. When calibrated to match the increase in U.S. trade between 1990 and 2010, the model suggests that (1) output increases immediately after a trade shock and converges quickly to the steady state; (2) labor market institutions likely play a larger role in the adjustment process than specific human capital; (3) the short run distributional effects are small if the labor market is flexible, even in the presence of specific human capital. (Copyright: Elsevier)

Suggested Citation

  • Moritz Ritter, 2014. "Offshoring and occupational specificity of human capital," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 780-798, October.
    • Handle: RePEc:red:issued:11-147
    DOI: 10.1016/j.red.2013.12.002
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    Cited by:

    1. Tobal, Martin, 2011. "A Rationale For Evidence On Service Offshoring," University of California at San Diego, Economics Working Paper Series qt5s4056z6, Department of Economics, UC San Diego.
    2. BERTINELLI, Luisito & CARDI, Olivier & RESTOUT, Romain, 2020. "Relative Productivity And Search Unemployment In An Open Economy," Journal of Economic Dynamics and Control, Elsevier, vol. 117(C).
    3. Chen, Hong & Liu, Bei & Li, Yi & Cai, Yujie, 2022. "The relationship between negative life events and resilience among Chinese service employees: Nonlinearly moderated by lifestyle habits," Journal of Asian Economics, Elsevier, vol. 80(C).
    4. 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.
    5. Illenin O. Kondo, 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.).
    6. Artuç, Erhan & McLaren, John, 2015. "Trade policy and wage inequality: A structural analysis with occupational and sectoral mobility," Journal of International Economics, Elsevier, vol. 97(2), pages 278-294.
    7. Joel Rodrigue & Kunio Tsuyuhara, 2018. "On‐the‐job‐search, wage dispersion and trade liberalization," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(2), pages 452-482, May.

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    More about this item

    Keywords

    Offshoring; Sectoral labor reallocation; Human capital;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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