IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/24620.html
   My bibliography  Save this paper

New technology and labour Markets: Entrants, outsourcing and matching

Author

Listed:
  • Goyal, Ashima

Abstract

The impact of new technology (ICT) on labour markets and welfare is analyzed in a model of matching. First, ICT lowers cost and speed of market access, thus reducing frictions in matching a searching worker to an opportunity. It raises output and lowers the cost of entry for a new firm. The rise in scale of aggregate employment raises productivity. Second, since the net effect of ICT raises the probability of a successful search by workers relative to a successful search by firms, workers share of the match surplus rises. Third, it induces more learning and innovation. Fourth, ICTs allows hitherto excluded segments to access new networks. This reduces the ability of members of an existing network to extract the entire surplus from a new entrant. Finally, it encourages cumulative improvements in technology and skills. More labour-using technological progress is induced. Multiple equilibria are possible, however, due to endogenous choice of training and technology. Therefore investment in training and technology may be at less than socially optimal levels. Policy implications follow.

Suggested Citation

  • Goyal, Ashima, 2005. "New technology and labour Markets: Entrants, outsourcing and matching," MPRA Paper 24620, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:24620
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/24620/1/MPRA_paper_24620.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. David Encaoua & Abraham Hollander, 2002. "Competition Policy and Innovation," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 63-79, Spring.
    2. Gandal, Neil & Shy, Oz, 2001. "Standardization policy and international trade," Journal of International Economics, Elsevier, vol. 53(2), pages 363-383, April.
    3. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 135-159.
    4. Chen, Yongmin & Ishikawa, Jota & Yu, Zhihao, 2004. "Trade liberalization and strategic outsourcing," Journal of International Economics, Elsevier, vol. 63(2), pages 419-436, July.
    5. Daron Acemoglu, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 445-464.
    6. Basu, Kaushik, 2003. "Prelude to Political Economy: A Study of the Social and Political Foundations of Economics," OUP Catalogue, Oxford University Press, number 9780199261857.
    7. Peter A. Diamond, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 217-227.
    8. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
    9. Bronwyn H. Hall, 2002. "The Assessment: Technology Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 1-9, Spring.
    10. Derek Laing & Theodore Palivos & Ping Wang, 1995. "Learning, Matching and Growth," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 115-129.
    11. Dossani, Rafiq & Kenney, Martin, 2003. "Went for Cost, Stayed for Quality?: Moving the Back Office to India," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt0b7764tt, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    12. MartÌn Rama, 2003. "Globalization and the Labor Market," World Bank Research Observer, World Bank Group, vol. 18(2), pages 159-186.
    13. Robin Mansell, 2001. "Digital Opportunities and the Missing Link for Developing Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 17(2), pages 282-295, Summer.
    14. David, Paul A & Shurmer, Mark, 1996. "Formal standards-setting for global telecommunications and information services. Towards an institutional regime transformation?," Telecommunications Policy, Elsevier, vol. 20(10), pages 789-815, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ashima Goyal, 2013. "Growth drivers: ICT and inclusive innovations," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-018, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Ashima Goyal, 2006. "The Impact of ICT in Making Global Markets More Inclusive," Development Economics Working Papers 22336, East Asian Bureau of Economic Research.

    More about this item

    Keywords

    outsourcing; distance labour; matching; technology; multiple equilibria;

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:24620. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.