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 … improvements in the informal sector expand both offshoring and outsourcing, and the developed nation wage must rise. When the …

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 …

We present a model which considers both regulatory burden of offshoring barriers and possible terms of trade gains from … offshoring tax. Otherwise, free trade is optimal. Welfare reductions from an offshoring tax are more likely with several … developed nations engaging in offshoring. We derive and characterize the Nash equilibrium in such a case …

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 …