We analyze the effect of low-skill workers offshoring on the welfare of the economy. In the context of a matching model … with different possible equilibria, we discuss two policies that could potentially outweigh the negative welfare effects of … that, while both policy instruments can theoretically bring the economy back to previous welfare levels, careful thought …

. Our exercise suggests that the endogenous adjustment of low-skill workers can only partially offset the welfare …-deteriorating effects of offshoring. As a result, we aim at restoring welfare by increasing the opportunity cost of staying low-skill. In … addition to this, we also consider labor flexibility as an effective policy to deal with the adverse welfare effects of …

We analyze the effect of low-skill workers offshoring on the welfare of the economy. In the context of a matching model … with different possible equilibria, we discuss two policies that could potentially outweigh the negative welfare effects of … that, while both policy instruments can theoretically bring the economy back to previous welfare levels, careful thought …