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Delaying the Timing of Offshoring Low-Skilled Tasks


  • Felipa de Mello-Sampayo

    () (ISCTE - Department of Economics and UNIDE-ERC)

  • Sofia de Sousa-Vale

    (ISCTE - Department of Economics and UNIDE-ERC)

  • Francisco Camões

    (ISCTE - Department of Economics and UNIDE-ERC)


This paper examines the impact of uncertainty on offshoring low-skilled tasks. The model shows that greater demand uncertainty adversely affects the expected profit and timing of offshoring. It is also shown that a home country tax rate deduction increases the volatility of the expected profits, making offshoring appear to be more risky. One policy implication of our results is that, in order to delay relocation of MNE’s production from the home country, a government should adopt tax rate deduction rather than a direct subsidy because the former is more economical and effective than the latter.

Suggested Citation

  • Felipa de Mello-Sampayo & Sofia de Sousa-Vale & Francisco Camões, 2008. "Delaying the Timing of Offshoring Low-Skilled Tasks," Working Papers Series 1 ercwp1208, ISCTE-IUL, Business Research Unit (BRU-IUL).
  • Handle: RePEc:isc:iscwp1:ercwp1208

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    References listed on IDEAS

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    Cited by:

    1. Chenaf-Nicet, Dalila & Rougier, Eric, 2016. "The effect of macroeconomic instability on FDI flows: A gravity estimation of the impact of regional integration in the case of Euro-Mediterranean agreements," International Economics, Elsevier, vol. 145(C), pages 66-91.
    2. Anwar, Sajid, 2013. "Outsourcing and the skilled–unskilled wage gap," Economics Letters, Elsevier, vol. 118(2), pages 347-350.

    More about this item


    Offshoring; Multinational Enterprises; Option-Pricing Model; Fiscal Policy;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation


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