improvements in the informal sector expand both offshoring and outsourcing, and the developed nation wage must rise. When the …We present a model of offshoring of tasks to a developing nation, which is characterized by a minimum wage formal … informal sector. An improvement in the productivity in performing offshored tasks in the developing country raises offshoring …

We construct a model of offshoring with externalities and firm heterogeneity. Due to the presence of externalities …, temporary shocks like the Y2K problem can have permanent effects, i.e., they can permanently raise the extent of offshoring in … an industry. Also, the initial advantage of a country as a potential host for outsourcing activities can create a lock in …

unemployment decreases upon offshoring in the presence of perfect intersectoral labor mobility. If, as a result, labor moves to the … intersectoral labor mobility, unemployment in the offshoring sector can rise, with an unambiguous unemployment reduction in the non-offshoring … unemployment in this sector rising. -- Trade ; offshoring ; search ; unemployment …

decreases. Next we allow for offshoring of unskilled jobs in our model, and we find that, as a result, it becomes more likely … that the fair-wage constraint binds. Offshoring of unskilled jobs always leads to an increase in skilled wage, a decrease … adverse impact of offshoring on unskilled unemployment. The unskilled wage can increase or decrease as a result of offshoring …

In this paper, in order to study the impact of offshoring on sectoral and economywide rates of unemployment, we … offshoring. This result can be understood to arise from the productivity enhancing (cost reducing) effect of offshoring. If the … search cost is identical in the two sectors, or even if the search cost is higher in the sector which experiences offshoring …

The various channels through which a reduction in the cost of offshoring can improve wages in a developed country are … by now well understood. But does a similar reduction in the offshoring cost also benefit workers in the world's factories … in developing countries? Using a parsimonious two-country model of offshoring we find very nuanced results. These include …