A Complete Characterization of the Distributional Effects of International Outsourcing in the Heckscher-Ohlin Model

This paper determines the distributional effects of internationaloutsourcing in a two sector Heckscher-Ohlin type model. It isshown that the factor-biased and the sector-biased impact ofinternational outsourcing discussed in the literature can be seenas special cases of the more general characterization presented inthis paper. Concerning the welfare implications of internationaloutsourcing, the main finding is that a Pareto-improvement cannotbe excluded from a theoretical point of view.