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/lp/american-economic-association/offshoring-and-directed-technical-change-diKGawfYVR
- Publisher
- American Economic Association
- Copyright
- Copyright © 2015 by the American Economic Association
- Subject
- Articles
- ISSN
- 1945-7715
- eISSN
- 1945-7715
- DOI
- 10.1257/mac.20130302
- Publisher site
- See Article on Publisher Site
Abstract
Abstract We study the implications of offshoring on innovation, technology, and wage inequality in a Ricardian model with directed technical change. Profit maximization determines both the extent of offshoring and the direction of technological progress. A fall in the offshoring cost induces technical change with an ambiguous factor bias. When the initial cost of offshoring is high, an increase in offshoring opportunities causes a fall in the real wages of unskilled workers in industrial countries, skill-biased technical change and rising skill premia. When the offshoring cost is sufficiently low, instead, offshoring induces technical change biased in favor of the unskilled workers. (JEL J24, J31, L24, O33 )
Journal
American Economic Journal: Macroeconomics – American Economic Association
Published: Jul 1, 2015