This paper explores the welfare consequences of international outsourcing in the presence of resulting environmental damage in a three-stage model of North-South trade. In stage 1, outsourcing firms in the North (e.g., United States [US] and Europe) cause environmental damage to the vendor...

This paper explores the ramifications of international outsourcing on unemployment, income distribution and welfare, which is an important but yet unresolved issue. Using the well-known Harris-Todaro (1970) model of sector-specific unemployment, it shows that the effects of outsourcing on...