We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the … pay wages that are positively linked to their profits by a rent-sharing mechanism. Offshoring involves fixed and task … variable offshoring costs. A reduction in those variable costs increases offshoring at the intensive and at the extensive …

markets through exporting and through offshoring, and we show that due to monopsonistic competition our model makes sharply … and the offshoring of tasks. At the firm-level, exporting leads to higher wages and employment, while offshoring of … firms restrict employment to keep wages low, resulting in too many firms that are on average too small. Offshoring on the …

multinationals, are less likely to rely on imported or internally provided services. -- international trade ; services ; off-shoring …

. Such outsourcing leads to increased wages for the remaining inhouse production. We find that stronger unions, which imply … higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a … theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many …