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Delocation, home wages and welfare

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  • Alexandre SIMONS

    () (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

I present a general equilibrium model of delocation where firms move from the North to the South to benefit from low wages. As suggested by the large empirical litterature, welfare in the North increases when the host country is not technologically too lagged. Moreover, I show that vertical technology transfer to the South plays a major role in enhancing welfare of workers-consumers in the North and in the South. This analysis helps explaining the differences in empirical findings on production delocation.

Suggested Citation

  • Alexandre SIMONS, 2014. "Delocation, home wages and welfare," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2014007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2014007
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2014007.pdf
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    References listed on IDEAS

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    1. Aitken, Brian & Harrison, Ann & Lipsey, Robert E., 1996. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," Journal of International Economics, Elsevier, vol. 40(3-4), pages 345-371, May.
    2. Keuschnigg, Christian & Ribi, Evelyn, 2009. "Outsourcing, unemployment and welfare policy," Journal of International Economics, Elsevier, vol. 78(1), pages 168-176, June.
    3. Shapiro, Carl & Stiglitz, Joseph E, 1985. "Can Unemployment Be Involuntary? Reply [Equilibrium Unemployemnt as a Worker Discipline Device]," American Economic Review, American Economic Association, vol. 75(5), pages 1215-1217, December.
    4. MartÌn Rama, 2003. "Globalization and the Labor Market," World Bank Research Observer, World Bank Group, vol. 18(2), pages 159-186.
    5. Falk, Martin & Koebel, Bertrand M, 2002. " Outsourcing, Imports and Labour Demand," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 567-586, December.
    6. David A. Riker & S. Lael Brainard, 1997. "U.S. Multinationals and Competition from Low Wage Countries," NBER Working Papers 5959, National Bureau of Economic Research, Inc.
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