IDEAS home Printed from https://ideas.repec.org/p/fip/fedlwp/2009-039.html

Incidence of an outsourcing tax on intermediate inputs

Author

Listed:
  • Subhayu Bandyopadhyay

Abstract

The paper uses a Hecksher-Ohlin-Samuelson type general equilibrium framework to consider the incidence of an outsourcing tax on an economy in which the production of a specific intermediate input has been fragmented and outsourced. When the input is ?non-traded?, the outsourcing tax can reduce domestic wages even if the intermediate input producing sector is the most capital-intensive sector of the economy. This implies that contrary to received wisdom, a tax on a capital-intensive sector may actually hurt labor. On the other hand, if the intermediate input is traded, the outsourcing tax must close down the final good producing sector that uses it specifically in its production. In turn, this may force the government to look for additional policy instruments to help sustain this domestic industry.

Suggested Citation

  • Subhayu Bandyopadhyay, 2009. "Incidence of an outsourcing tax on intermediate inputs," Working Papers 2009-039, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2009-039
    DOI: 10.20955/wp.2009.039
    as

    Download full text from publisher

    File URL: https://doi.org/10.20955/wp.2009.039
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.20955/wp.2009.039?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why it is foolish to tax outsourced goods
      by Economic Logician in Economic Logic on 2009-10-15 19:28:00

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • F1 - International Economics - - Trade
    • D3 - Microeconomics - - Distribution

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Economic Logic blog

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:2009-039. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Scott St. Louis (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.