Make or Buy: Offshoring of Services Functions in Manufacturing

Nordås, Hildegunn Kyvik

doi:10.1007/s11151-020-09771-1

Cited by 6 publications

(3 citation statements)

References 29 publications

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“…Thus, an increase in N represents the upgrading of the quality (productivity) of the unit measure of tasks. 10 Each task is produced by combining labor or capital with a task-specific intermediate q(i) , which embodies the technology used either for automation or for production with labor. To simplify the exposition, we start by assuming that these intermediates are supplied competitively, and that they can be produced using ψ units of the final good.…”

Section: A Environmentmentioning

confidence: 99%

The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

Acemoğlu

Restrepo

2018

American Economic Review

1,544

498

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We examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks, in which labor has a comparative advantage, can be created. In a static version where capital is fixed and technology is exogenous, automation reduces employment and the labor share, and may even reduce wages, while the creation of new tasks has the opposite effects. Our full model endogenizes capital accumulation and the direction of research toward automation and the creation of new tasks. If the long-run rental rate of capital relative to the wage is sufficiently low, the long-run equilibrium involves automation of all tasks. Otherwise, there exists a stable balanced growth path in which the two types of innovations go hand-in-hand. Stability is a consequence of the fact that automation reduces the cost of producing using labor, and thus discourages further automation and encourages the creation of new tasks. In an extension with heterogeneous skills, we show that inequality increases during transitions driven both by faster automation and the introduction of new tasks, and characterize the conditions under which inequality stabilizes in the long run. (JEL D63, E22, E23, E24, J24, O33, O41)

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Section: A Environmentmentioning

confidence: 99%

The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

Acemoğlu

Restrepo

2018

American Economic Review

1,544

498

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“…Under weak protection, the foreign company may not transfer the necessary knowledge or know‐how to enable the local producer to manufacture a higher‐quality good. Moreover, offshoring can involve significant shifts of in‐house R&D to the foreign location (see Nordås, 2020), in which case the local patent environment should be important.…”

Section: Resultsmentioning

confidence: 99%

Export quality and patent protection: Stage‐dependent effects in development

Yan

Park

2020

Review Development Economics

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This paper provides empirical evidence on the effects of patent protection on the vertical innovation of developing country exporters. We find that the relationship between export quality upgrading and patent protection is dependent on the technological stage of an economy. Specifically, patent protection promotes quality growth if an economy's product quality is sufficiently close to the world frontier level. We characterize the density of the distribution of country products, determining the share of country-product combinations that fall under or pass a threshold, and draw some implications for patent policy design. While a majority of combinations exceed the critical threshold, the results nevertheless call for differentiation in the strength of patent protection by income group and product class. To establish these findings, we employ a very extensive index of export product quality at the four-digit SITC level and utilize a country-level measure of effective patent protection for the period 1990-2010.

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“…Our data sample includes 45 industries, including 20 service industries, from a “rest‐of‐the‐world” region and 65 trading partner countries of Germany between 2014 and 2018. The change in

{SOI}_{kt}^{H}

is expected to affect the wages of employees working for domestic service producers and in‐house service functions of domestic goods producers (Nordås, 2020).…”

Section: Methodsmentioning

confidence: 99%

Service offshoring and its impacts on wages: An occupation‐oriented analysis of Germany

Frenkel,

Ngo

2023

World Economy

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International trade in services has increased significantly in recent decades, mainly due to innovations in information and communication technology. This development has also increased the importance of service offshoring, as companies spread their production processes across several countries. This paper examines the intensity of offshoring of specific tasks of occupations, which in turn leads to higher imports, and explores the impact of such substitution on wages in the home economy. We use micro‐level data from the Occupational Information Network and the Socio‐Economic Panel in Germany and draw on the OECD's Input–Output Database. In total, we used data from about 62,000 person‐years in 45 industries in Germany during 2014–2018. A particular focus of our study is on the interaction between service offshoring and the tradability as well as skill levels of workers. Our main findings suggest that service offshoring itself exerts downward pressure on workers' wages. This effect is amplified by the degree of tradability of the occupations.

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Make or Buy: Offshoring of Services Functions in Manufacturing

Cited by 6 publications

References 29 publications

The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

Export quality and patent protection: Stage‐dependent effects in development

Service offshoring and its impacts on wages: An occupation‐oriented analysis of Germany

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