We set up a two-country general equilibrium model, in which heterogeneous firms from one country (the source country) can offshore routine tasks to a low-wage host country. The most productive firms self-select into offshoring, and the impact on welfare in the source country can be positive or...

Combining administrative data on German workers with commercial data on German producers, we find evidence that German subsidiaries of foreign multinationals, while paying a premium relative to other local producers, offer wages of similar size as German subsidiaries of German multinationals....

We develop a general equilibrium two-country model with heterogeneous producers, self-selection of only the most productive firms into multinational activity and rent sharing at the firm level due to fairness preferences of workers. In this setting, we identify two major sources of a...

Is it possible to escape from a poverty trap through international trade? To answer this question, we extend Murphy et al.’s (1989b) famous “Big Push” model towards a global economy. In general oligopolistic equilibrium, firms choice between a traditional CRS and a modern IRS technology...