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Offshoring of medium-skill jobs, polarization, and productivity effect : implications for wages and low-skill unemployment

Listed author(s):
  • Vallizadeh, Ehsan

    ()

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Muysken, Joan
  • Ziesemer, Thomas

"We examine the effects of endogenous offshoring on cost-efficiency, wages and unemployment in a task-assignment model with skill heterogeneity. Exact conditions for the following insights are derived. The distributional effect of offshoring (high-) low-skill-intensive tasks is similar to (unskilled-) skill-biased technology changes, while offshoring medium-skillintensive tasks induces wage polarization. Offshoring improves cost-efficiency through international task reallocation and puts a downward pressure on all wages through domestic skill-task reallocation. If elasticities of task substitution are low (high), the downward pressure on wages in neighboring skill segments is low (high) with a net effect of higher (lower) wages and employment." (Author's abstract, IAB-Doku) ((en))

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Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201507.

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Length: 55 pages
Date of creation: 11 Feb 2015
Handle: RePEc:iab:iabdpa:201507
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