We examine the relationship between o§shoring and the labour market in an occupational choice model of trade and endogenous growth where workers are employed on the basis of their individual skill levels. Trade liberalization leads to o§shoring and reduces employment in the manufacturing sector. Displaced workers move into the traditional and innovation sectors according to their skill levels, shaping real wages and aggregate productivity in the manufacturing sector. The paper aims to show how inter-sectoral labour market adjustments, highlighted by skill heterogeneity, could be a possible explanation for the simultaneous rise in productivity and reduction in real wages that have coincided with the sharp escalation of o§shoring activities in the US manufacturing sector since 2004.

Naghavi, A.. "Offshoring production: a simple model of wages, productivity, and growth" Working paper, RECENT WORKING PAPER SERIES, Dipartimento di Economia Marco Biagi – Università di Modena e Reggio Emilia, 2008.

Offshoring production: a simple model of wages, productivity, and growth

Naghavi, A.
2008-01-01

Abstract

We examine the relationship between o§shoring and the labour market in an occupational choice model of trade and endogenous growth where workers are employed on the basis of their individual skill levels. Trade liberalization leads to o§shoring and reduces employment in the manufacturing sector. Displaced workers move into the traditional and innovation sectors according to their skill levels, shaping real wages and aggregate productivity in the manufacturing sector. The paper aims to show how inter-sectoral labour market adjustments, highlighted by skill heterogeneity, could be a possible explanation for the simultaneous rise in productivity and reduction in real wages that have coincided with the sharp escalation of o§shoring activities in the US manufacturing sector since 2004.
Novembre
Naghavi, A.
Naghavi, A.. "Offshoring production: a simple model of wages, productivity, and growth" Working paper, RECENT WORKING PAPER SERIES, Dipartimento di Economia Marco Biagi – Università di Modena e Reggio Emilia, 2008.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11380/1292180
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