In this paper, we develop a two-sector general equilibrium trade model which includes offshoring, sequential production … technological change affect equilibrium offshoring patterns. We show that, against common belief, a reduction in trade costs lowers … the range of tasks offshored even though the aggregate volume of offshoring may increase. …

, by applying a two-stage model approach we find that mobility is mediated by the probability to find regular employment. …

Sunk firing costs shelter employment and this effect is typically amplified by uncertainty due to an option value of … waiting. Thus, if sunk firing costs are high, e.g. due to a employment protection legislation, and if recession related losses … are with a high probability expected to be only transitory and not permanent, a relatively small employment subsidy will …