We show that, even with flexible domestic wages, international outsourcing may worsen the welfare of the home country … and reduce the profits of all firms. If wages are rigid, outsourcing is welfare-improving if and only if the sum of the … welfare. We also extend the model to a two-period framework. Delaying outsourcing can be gainful because the fixed cost of …

equilibrium where input sub-bundles may be traded (offshoring). The model allows for several goods and two fragments, produced …. I also explore trade policy implications and compare offshoring to migration. …

We show that in a Ricardo-Viner-type trade model with unemployment due to search and matching the productivity effect … of offshoring emphasized by Grossman & Rossi-Hansberg (2008) emerges as a vehicle of job creation. Improvements in the … technology of offshoring causes job losses at the extensive margin where ever more tasks are performed abroad, but it also causes …

unemployment. If the jobs performed by domestic workers can be easily substituted by imports, then globalization reduces wages and … increases unemployment. In this situation, in the absence of any government intervention globalization not only reduces the … welfare of workers but could reduce social welfare as well. Both unemployment benefits and severance payments can protect …

outsourcing by locating part of the production process abroad. Our results show that the incentive to relax the self … taxation. In addition, the appearance of equilibrium unemployment also provides an incentive for the government to directly tax … outsourcing. Without a direct instrument for taxing outsourcing, the government may reduce the amount of resources spent on …

markets are missing. The main results are: (i) outsourcing raises unemployment and labor income risk ofunskilled workers; (ii …The paper investigates the consequences of outsourcing of labor intensive activities to low-wage economies. This trend … challenges the two basic functions of the welfare state, redistribution and social insurance when private unemployment insurance …

show that roughly 50% of the observed raw differential in individual dismissal rates can be explained by the estimated …

Recent empirical studies have been searching for evidence on and driving forces for offshoring. Frequently, this has … competing with the role of multilateral trade resistance. Our results support evidence for offshoring activities across Europe …