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Offshoring and Occupational Specificity of Human Capital

  • Ritter, Moritz

This paper develops a dynamic general equilibrium model in which workers acquire human capital specific to the task they complete. The dynamic nature of the model allows for differentiation between short and long run effects of offshoring on productivity and labour market outcomes. The welfare effects of increased offshoring are unambiguously positive; their magnitude depends on the difference between autarky and world relative prices, but not on the skill-content of offshored and inshored tasks. For reasonable terms of trade, the steady state welfare gains are found to be between 1.8% and 4% in the calibrated model. The distribution of the gains from trade critically depends on the time horizon: in the short term, workers with human capital specific to the inshored occupations gain, while workers with human capital specific to the offshored occupations lose. In the long run, the gains from trade are equally distributed among ex-ante identical agents.

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File URL: https://mpra.ub.uni-muenchen.de/19671/1/MPRA_paper_19671.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19671.

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Date of creation: 30 Dec 2009
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Handle: RePEc:pra:mprapa:19671
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  1. Iourii Manovskii & Gueorgui Kambourov, 2004. "Occupational Specificity of Human Capital," 2004 Meeting Papers 197, Society for Economic Dynamics.
  2. Mitra, Devashish & Ranjan, Priya, 2007. "Offshoring and Unemployment," IZA Discussion Papers 2805, Institute for the Study of Labor (IZA).
  3. Kambourov, Gueorgui & Manovskii, Iourii, 2004. "Occupational Mobility and Wage Inequality," IZA Discussion Papers 1189, Institute for the Study of Labor (IZA).
  4. Davidson, Carl & Martin, Lawrence & Matusz, Steven, 1999. "Trade and search generated unemployment," Journal of International Economics, Elsevier, vol. 48(2), pages 271-299, August.
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  7. Davidson, Carl & Matusz, Steven J. & Shevchenko, Andrei, 2008. "Outsourcing Peter To Pay Paul: High-Skill Expectations And Low-Skill Wages With Imperfect Labor Markets," Macroeconomic Dynamics, Cambridge University Press, vol. 12(04), pages 463-479, September.
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  15. Kiminori Matsuyama, 1992. "A Simple Model of Sectoral Adjustment," Review of Economic Studies, Oxford University Press, vol. 59(2), pages 375-387.
  16. Erhan Artuç, 2009. "Intergenerational Effects of Trade Liberalization," Koç University-TUSIAD Economic Research Forum Working Papers 0913, Koc University-TUSIAD Economic Research Forum.
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  18. Joseph G. Altonji & Nicolas Williams, 2005. "Do Wages Rise with Job Seniority? A Reassessment," ILR Review, Cornell University, ILR School, vol. 58(3), pages 370-397, April.
  19. Alan S. Blinder, 2009. "How Many US Jobs Might be Offshorable?," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 10(2), pages 41-78, April.
  20. Stephen Cameron & Shubham Chaudhuri & John McLaren, 2007. "Trade Shocks and Labor Adjustment: Theory," NBER Working Papers 13463, National Bureau of Economic Research, Inc.
  21. Ekholm, Karolina & Hakkala, Katariina, 2006. "The Effect of Offshoring on Labour Demand: Evidence from Sweden," CEPR Discussion Papers 5648, C.E.P.R. Discussion Papers.
  22. Robert G. Valletta, 2002. "Recent trends in unemployment duration," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov22.
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  24. Brown, James N & Light, Audrey, 1992. "Interpreting Panel Data on Job Tenure," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 219-57, July.
  25. Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2009. "Inequality and Unemployment in a Global Economy," CEP Discussion Papers dp0940, Centre for Economic Performance, LSE.
  26. Gueorgui Kambourov, 2009. "Labour Market Regulations and the Sectoral Reallocation of Workers: The Case of Trade Reforms," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1321-1358.
  27. Guido Menzio & Shouyong Shi, 2011. "Efficient Search on the Job and the Business Cycle," Working Papers tecipa-437, University of Toronto, Department of Economics.
  28. Ralph Ossa, 2012. "Why Trade Matters After All," NBER Working Papers 18113, National Bureau of Economic Research, Inc.
  29. Amiti, Mary & Wei, Shang-Jin, 2006. "Service Offshoring, Productivity and Employment: Evidence from the US," CEPR Discussion Papers 5475, C.E.P.R. Discussion Papers.
  30. Stephen A. Woodbury, 2009. "Unemployment," Chapters, in: Labor and Employment Law and Economics, chapter 17 Edward Elgar.
  31. Davidson, Carl & Matusz, Steven J. & Shevchenko, Andrei, 2008. "Globalization and firm level adjustment with imperfect labor markets," Journal of International Economics, Elsevier, vol. 75(2), pages 295-309, July.
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  33. Christian Broda & David E. Weinstein, 2006. "Globalization and the Gains From Variety," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 541-585.
  34. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-77, October.
  35. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-91, October.
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