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Offshoring and migration in a world with policy spillovers

Author

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  • Cosimo BEVERELLI
  • Gianluca OREFICE
  • Nadia ROCHA

Abstract

Using a trade in task model that extends the one of Ottaviano, Peri, and Wright (2010) to three countries, we study the effects of immigration and offshoring costs on employment. Tasks can be performed by migrants, offshore workers or natives, with sorting along a continuum of task determined by cost minimization. For two alternative specifications of the model - one in which the ordering of low-end and intermediate tasks is pinned down by worker characteristic and one in which it is pinned down by country characteristics - we derive testable predictions on `direct', `domestic spillover' and `international spillover' effects of migration and offshoring costs on the number of migrants and the number of offshore workers. Direct effects refer to the impact of own migration (offshoring) costs on number of migrant (offshore) workers. Domestic spillovers capture the effect of own migration (offshoring) costs on the number of offshore (migrant) workers. International spillovers refer to the direct effect of country j's migration (offshoring) costs on country i's migration (offhoring), and to the indirect effect of country j's migration (offshoring) costs on country i's offshoring (migration). Overall, we find strong support of negative direct effects, mild support for domestic spillover effects and very limited support for international spillover effect, leading to conclude that the second model specification is a better fit of the data. Two broad policy implications follow. First, host countries can affect the number of migrants by acting both on bilateral migration policies and on bilateral offshoring policies. Second, de jure discriminatory policies on migration or offshoring need not be de facto so.

Suggested Citation

  • Cosimo BEVERELLI & Gianluca OREFICE & Nadia ROCHA, 2011. "Offshoring and migration in a world with policy spillovers," Departmental Working Papers 2011-25, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2011-25
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    References listed on IDEAS

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    Cited by:

    1. Hatzigeorgiou, Andreas & Karpaty, Patrik & Kneller, Richard & Lodefalk, Magnus, 2016. "Immigrant Employment and the Contract Enforcement Costs of Offshoring," Ratio Working Papers 282, The Ratio Institute, revised 01 Feb 2022.

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    More about this item

    Keywords

    Trade in Tasks; employment; spillover effects;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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