Unemployment and Welfare Consequences of International Outsourcing under Monopolistic Competition
This paper challenges the conventional academic view that international outsourcing is just another form of gainful trade. Contrary to this view, we show that labor-service outsourcing can reduce the high-wage country's welfare even when product-market trade is beneficial, within a model that combines involuntary unemployment and monopolistic competition. Outsourcing's impact on welfare is worsened by a definite loss of jobs and a possible contraction in the range of varieties produced worldwide. While owners of capital benefit from outsourcing under certain conditions, labor's welfare always falls.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
| Length: | 24 pages |
| Date of creation: | 06 Oct 2011 |
| Date of revision: | |
| Publication status: | Published: Carleton Economic Papers |
| Handle: | RePEc:car:carecp:11-07 |
| Contact details of provider: | Postal: C870 Loeb Building, 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada Phone: 613-520-3744 Fax: 613-520-3906
|
| Order Information: | Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Richard Brecher & Zhiqi Chen, 2008.
"Unemployment of Skilled and Unskilled Labor in an Open Economy: International Trade, Migration, and Outsourcing,"
Carleton Economic Papers
08-07, Carleton University, Department of Economics, revised Nov 2010.
- Richard A. Brecher & Zhiqi Chen, 2010. "Unemployment of Skilled and Unskilled Labor in an Open Economy: International Trade, Migration, and Outsourcing," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 990-1000, November.
- Jagdish Bhagwati & Arvind Panagariya & T. N. Srinivasan, 2004.
"The Muddles over Outsourcing,"
International Trade
0408004, EconWPA.
- Jagdish Bhagwati & Arvind Panagariya, 2004. "The Muddles over Outsourcing," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 93-114, Fall.
- Mitra, Devashish & Ranjan, Priya, 2007.
"Offshoring and Unemployment,"
IZA Discussion Papers
2805, Institute for the Study of Labor (IZA).
- Devashish Mitra & Priya Ranjan, 2007. "Offshoring and Unemployment," Working Papers 060719, University of California-Irvine, Department of Economics.
- Devashish Mitra & Priya Ranjan, 2007. "Offshoring and Unemployment," NBER Working Papers 13149, National Bureau of Economic Research, Inc.
- Hartmut Egger & Udo Kreickemeier, 2005.
"International Fragmentation: Boon or Bane for Domestic Employment?,"
CESifo Working Paper Series
1595, CESifo Group Munich.
- Egger, Hartmut & Kreickemeier, Udo, 2008. "International fragmentation: Boon or bane for domestic employment," European Economic Review, Elsevier, vol. 52(1), pages 116-132, January.
- Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 217-235.
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.
When requesting a correction, please mention this item's handle: RePEc:car:carecp:11-07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabrina Robineau)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.