We present a global production sharing model that integrates the organizational choices of offshoring into the determination of relative wages in developing countries. The model shows that offshoring through foreign direct investment contributes more prominently than arm's length outsourcing to...

This paper studies how firms' offshoring decisions shape a country's domestic production networks. We develop a model in which heterogeneous firms source inputs from multiple industries located in different domestic regions and foreign countries. Input sourcing entails communication with...

Incorporating family decisions in a two-period.model of the world economy, we predict that trade liberalization raises the skill premium and reduces child labour in developing countries where the adult labour force is sufficiently well educated to attract production activities from abroad that...

The aim of this paper is to explore the viability of off-shoring of accounting services to foreign companies by providers of such services located in Republic of Macedonia. We have assessed the potentials of accountants in Republic of Macedonian to offer off-shored accounting services by using...

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...

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...

Advances in communication technology have led to a remarkable increase in the tradability of services, resulting in a substantial increase in offshoring of services over the last two decades. Research investigating how this surge in service offshoring affects employment, has been largely...

Economies and production systems are subject to incessant processes of structural change fuelled by the dynamics of demand, technology and international competition. The increasing international fragmentation of production, also known as "offshoring", is an important element of such a (global in...

Many industrialized economies have seen a rapid rise in top income inequality and in the globalization of production since the 1980s. In this paper I propose an open economy model of executive pay to study how offshoring affects the pay level and incentives of top earners. The model introduces a...

Whether or not international trade exposes workers to economic insecurity depends on the nature of the trade exposure of the firm, or industry, in which the worker is employed. Import-competing industries experience higher levels of risk to workers’ incomes and employment, while firms that...

In this paper we confirm the existence of improvements of firm productivity when domestic upstream and downstream firms become more internationalized and therefore offshore (import intermediate inputs) and inshore (export final output for intermediate input usage) intensively. Chinaś accession...

As services and goods differ with respect to important characteristics, one may expect that the determinants of internationalisation are not identical for services and manufacturing. Surprisingly, there is practically no firm-level research contrasting the two sectors in this respect. To fill...

The various channels through which a reduction in the cost of offshoring can improve wages in a developed country are by now well understood. But does a similar reduction in the offshoring cost also benefit workers in the world's factories in developing countries? Using a parsimonious...

In this paper we survey the recent empirical literature on the effects of offshoring on wage, employment and displacement. We start with an overview of the measurement of offshoring, organizing our discussion around the three key elements of offshoring: that it involves intermediate inputs for...

Using administrative employee-firm-level data on the entire private sector from 1994 to 2007, we show that the labor market in France has polarized: employment shares of high and low wage occupations have grown, while middle wage occupations have shrunk. During the same period, the share of...

This paper reviews the debate on the economic effect of the international fragmentation of production, also known as "offshoring", and provides a preliminary investigation of the impact of intermediate imported inputs on employment and wages in five European countries (Germany, Spain, France,...

In this paper we analyze the conditions under which firms decide to offshore innovation. We consider the role of internal technological capabilities and technological dynamism in the firm environment, distinguishing speed and uncertainty of technological change. Using unique data from the German...

There has been an intense debate as to the effects of offshoring and global value chains on labor, with the debate centering around possible negative employment and income effects for the low(er) skilled in advanced economies. Although sociological and psychological research has shown that...

This article explores the impact of innovation, offshoring and demand on profits and wage dynamics. The growing relevance of functional distribution in terms of explaining personal distribution underscores the importance of our results for understanding recent increases in inequality. The...

In this paper we explore the role that demand uncertainty plays for the offshoring decision, and the role that offshoring plays for domestic volatility of employment. Offshoring is modeled as in Antràs & Helpman (2004), but we assume complete contracts. Firms are heterogeneous as in Melitz...

We analyse the effects of imports on employment and earnings by distinguishing between import competition in final products and firms' use of imports in production (offshoring). We use Finnish worker-firm data merged with product-level trade data. We focus on Chinese imports and instrument them...

Exchange rate exposure of firms diminishes when imported intermediates and exports are denominated in currencies that move together. Appreciations of the domestic currency, raising foreign currency export prices, then also reduce marginal costs, allowing firms to counter the increase in foreign...

We discuss the effects of low-skill offshoring on the endogenous schooling decision of workers along with the potential changes in the labor market. The analysis is performed in the context of a matching model with different possible equilibria. Our exercise suggests that the endogenous...

This paper examines how Filipino-based business process outsourcing centers have been developing services, including offshore "staff leasing" and "co-managed services" arrangements, that are helping to overcome traditional small and medium enterprise (SME) resource constraints. These...

We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the high-wage country. Job polarisation is the result of a reallocation of labour across firms that differ in productivity and pay wages that are positively linked to their profits by...

We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the high-wage country. Job polarisation is the result of a reallocation of labour across firms that differ in productivity and pay wages that are positively linked to their profits by...

In this paper, the author presents the impact of new players and factors in international business activities, which have a direct influence on international economic structure. One of the most important determinants over the last decades has been foreign direct investment, which has encouraged...

The division of labor between and within countries is driven by two fundamental forces, comparative advantage and increasing returns. We set up a simple Ricardian model with a Marshallian input sharing mechanism to study their interplay. The key insight that emerges is that the interaction...

We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the high-wage country. Job polarisation is the result of a reallocation of labour across firms that differ in productivity and pay wages that are positively linked to their profits by...

I modify a standard model of the home market to introduce entry barriers that create local rents. The existence of rents has relevant implications. First, the home market effect magnifies. Second, when countries are sufficiently unequal in size and rents are sufficiently large, a trade costs...