IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/24620.html

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 and Oxford Review of Economic Policy Limited, vol. 18(1), pages 63-79, Spring.
    2. Daron Acemoglu, 1997. "Training and Innovation in an Imperfect Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(3), pages 445-464.
    3. Basu, Kaushik, 2003. "Prelude to Political Economy: A Study of the Social and Political Foundations of Economics," OUP Catalogue, Oxford University Press, number 9780199261857.
    4. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 135-159.
    5. Yongmin Chen & Jota Ishikawa & Zhihao Yu, 2026. "Trade Liberalization and Strategic Outsourcing," World Scientific Book Chapters, in: Strategic Trade Policy, chapter 14, pages 351-376, World Scientific Publishing Co. Pte. Ltd..
    6. Peter A. Diamond, 1982. "Wage Determination and Efficiency in Search Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(2), pages 217-227.
    7. 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.
    8. Bronwyn H. Hall, 2002. "The Assessment: Technology Policy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(1), pages 1-9, Spring.
    9. Derek Laing & Theodore Palivos & Ping Wang, 1995. "Learning, Matching and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(1), pages 115-129.
    10. 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.
    11. MartÌn Rama, 2003. "Globalization and the Labor Market," The World Bank Research Observer, World Bank, vol. 18(2), pages 159-186.
    12. Mansell, Robin, 2001. "Digital opportunities and the missing link for developing countries," LSE Research Online Documents on Economics 19033, London School of Economics and Political Science, LSE Library.
    13. Gandal, Neil & Shy, Oz, 2001. "Standardization policy and international trade," Journal of International Economics, Elsevier, vol. 53(2), pages 363-383, April.
    14. Robin Mansell, 2001. "Digital Opportunities and the Missing Link for Developing Countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 17(2), pages 282-295, Summer.
    15. 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," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2006-013, Indira Gandhi Institute of Development Research, Mumbai, India.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Naoki Shintoyo, 2008. "Creation of jobs and firm-sponsored training in a matching model of unemployment," Journal of Economics, Springer, vol. 93(2), pages 145-176, March.
    2. Laing, Derek & Palivos, Theodore & Wang, Ping, 2003. "The economics of 'new blood'," Journal of Economic Theory, Elsevier, vol. 112(1), pages 106-156, September.
    3. Caroline Jennings Saul & Heiko Gebauer, 2018. "Digital Transformation as an Enabler for Advanced Services in the Sanitation Sector," Sustainability, MDPI, vol. 10(3), pages 1-18, March.
    4. Chen, Been-Lon & Mo, Jie-Ping & Wang, Ping, 2002. "Market frictions, technology adoption and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(11), pages 1927-1954, September.
    5. Banerjee, Abhijit V. & Chiplunkar, Gaurav, 2024. "How important are matching frictions in the labor market? Experimental & non-experimental evidence from a large Indian firm," Journal of Development Economics, Elsevier, vol. 171(C).
    6. Chrysovalantou Milliou & Joel Sandonis, 2016. "Vertical Foreign Direct Investment: Make, Sell and (Not) Buy," CESifo Working Paper Series 6190, CESifo.
    7. Xiangbo Liu & Theodore Palivos & Xiaomeng Zhang, 2017. "Immigration, Skill Heterogeneity, And Qualification Mismatch," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1231-1264, July.
    8. Edward J. Oughton & Jatin Mathur, 2020. "Predicting cell phone adoption metrics using satellite imagery," Papers 2006.07311, arXiv.org, revised Jun 2021.
    9. Sagren Moodley, 2002. "Competing in the Digital Economy?: The Dynamics and Impacts of B2B E-commerce on the South African Manufacturing Sector," WIDER Working Paper Series DP2002-79, World Institute for Development Economic Research (UNU-WIDER).
    10. Zhihao Yu, 2006. "The Fear of Competitive Pressure of Globalization and Outsourcing," Carleton Economic Papers 06-09, Carleton University, Department of Economics, revised Jul 2011.
    11. Chassamboulli, Andri & Palivos, Theodore, 2013. "The impact of immigration on the employment and wages of native workers," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 19-34.
    12. repec:mbr:jmonec:v:10:y:2015:i:1:p:23-63 is not listed on IDEAS
    13. Claudio Michelacci, 2003. "Low Returns in R&D Due to the Lack of Entrepreneurial Skills," Economic Journal, Royal Economic Society, vol. 113(484), pages 207-225, January.
    14. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages 121-149, February.
    15. Goyal, Ashima, 2007. "Distant labour supply, skills and induced technical change," Information Economics and Policy, Elsevier, vol. 19(2), pages 133-150, June.
    16. Dermot Leahy & Catia Montagna, 2011. "Economising, Strategising and the Decision to Outsource," Dundee Discussion Papers in Economics 251, Economic Studies, University of Dundee.
    17. Belleflamme, Paul, 2002. "Coordination on formal vs. de facto standards: a dynamic approach," European Journal of Political Economy, Elsevier, vol. 18(1), pages 153-176, March.
    18. Swinnen Johan & Vandeplas Anneleen, 2012. "Rich Consumers and Poor Producers: Quality and Rent Distribution in Global Value Chains," Journal of Globalization and Development, De Gruyter, vol. 2(2), pages 1-30, January.
    19. Matthew Clarke, 2006. "Are the development policy implications of the new economy, new? All that is old is new again," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(5), pages 639-648.
    20. Christine Greenhalgh & Padraig Dixon, 2002. "The Economics of Intellectual Property: A Review to Identify Themes for Future Research," Economics Series Working Papers 135, University of Oxford, Department of Economics.
    21. Robin Mansell, 2006. "Ambiguous connections: entitlements and responsibilities of global networking," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(6), pages 901-913.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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.

    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 bibliographic 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.

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

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.