We show that, even with flexible domestic wages, international outsourcing may worsen the welfare of the home country … and reduce the profits of all firms. If wages are rigid, outsourcing is welfare-improving if and only if the sum of the … subsidy may improve welfare. We also extend the model to a two-period framework. Delaying outsourcing can be gainful because …

We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the … pay wages that are positively linked to their profits by a rent-sharing mechanism. Offshoring involves fixed and task … variable offshoring costs. A reduction in those variable costs increases offshoring at the intensive and at the extensive …

We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the … pay wages that are positively linked to their profits by a rent-sharing mechanism. Offshoring involves fixed and task … variable offshoring costs. A reduction in those variable costs increases offshoring at the intensive and at the extensive …

) can offshore routine tasks to a low-wage host country. The most productive firms self-select into offshoring, and the … impact on welfare in the source country can be positive or negative, depending on the share of firms engaged in offshoring … among entrepreneurs is higher with offshoring than in autarky. All results hold in a model extension with firm-level rent …

In this paper, we explore the role of trade in differentiated final goods as well offshoring of tasks for inequality …

fixed offshoring costs. In the skill-abundant country, high-productivity firms offshore a larger range of labor … 2007, we provide empirical support for the factor proportions channel through which offshoring to labor-abundant countries …

We set up a model of offshoring with heterogeneous producers that captures two empirical regularities of German … offshoring firms. There is selection of larger, more productive firms into offshoring. However, the selection is not sharp, and … offshoring and non-offshoring firms coexist over a wide range of the revenue distribution. An overlap of offshoring and non-offshoring …