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A Model of Occupational Choice, Offshoring and Immigration

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Abstract

This paper develops a two-country model of offshoring and immigration with occupational choice and endogenous firm productivity. Individuals in Home choose to become entrepreneurs or workers, whereas those in Foreign can only be employed as workers in either country. Entrepreneurs produce output using a fixed set of tasks that can be performed locally or abroad. The model is used to investigate the impact of offshoring and immigration policies on occupational choice, task allocation, productivity, income inequality, and welfare. The model yields several interesting findings, but most notably it predicts that lowering offshoring costs generates job polarization, and pro-offshoring and pro-immigration policies may not be welfare improving in Home.

Suggested Citation

  • Bulent Unel, 2016. "A Model of Occupational Choice, Offshoring and Immigration," Departmental Working Papers 2016-05, Department of Economics, Louisiana State University.
    • Handle: RePEc:lsu:lsuwpp:2016-05
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