In this paper we construct a general equilibrium model of trade and illustrate that return to unskilled labor may be negatively correlated with the price of product it produces. Specifically, we show that greater protection for the intermediate good that uses “unskilled” labor can reduce the...

This paper examines the impact of outsourcing of production on the volume and composition of home country’s research and development. We find that outsourcing decreases process R&D of the multinational firm in large markets when it only conducts process R&D (the substitution effect between...