Offshoring and Job Polarisation between Firms

Trade in tasks: Revisiting the wage and employment effects of offshoring

“…2015) and for an endogenously adjusting extensive task margin (as for example in Grossman and Rossi‐Hansberg 2008 and Egger et al. 2016).…”

“…Analyzing offshoring in a model with heterogeneous firms and rent sharing at the firm‐level, Egger et al. (2016) find that the level of equilibrium unemployment is tied to the distribution of wages across firms and that offshoring can have a non‐monotonic effect on equilibrium unemployment.…”

“…We explore how the labour supply effect (already present in Feenstra andHanson 1996, 1997) interacts with the productivity effect from Grossman and Rossi-Hansberg (2008) in shaping the wage and employment effects of offshoring. Our paper thereby addresses the important question of how to best model the offshoring process, allowing for both an exogenously fixed extensive task margin (as for example in Antrás and Helpman 2004, Mitra and Ranjan 2010 or Egger et al 2015) and for an endogenously adjusting extensive task margin (as for example in Grossman andRossi-Hansberg 2008 andEgger et al 2016).…”

“…Introducing collective bargaining into a search model, Ranjan (2013) shows that there is a non-monotonic relationship between offshoring and unemployment: unemployment falls for declining offshoring costs that are sufficiently high in the initial equilibrium and increases when the costs of offshoring become sufficiently low. 2 Analyzing offshoring in a model with heterogeneous firms and rent sharing at the firm-level, Egger et al (2016) find that the level of equilibrium unemployment is tied to the distribution of wages across firms and that offshoring can have a non-monotonic effect on equilibrium unemployment. 3 We structure our paper as follows.…”