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Offshoring and skill-biased technical change


Acemoglu, Daron; Gancia, Gino; Zilibotti, Fabrizio (2014). Offshoring and skill-biased technical change. VOX CEPR's Policy Portal: Centre for Economic Policy Research.

Abstract

Offshoring of production can have a deep impact on the wages and welfare of workers with different abilities through its effect on technological progress. This column argues that, when labour is sufficiently cheap abroad, firms have incentives to offshore low-skill tasks and invest in skill-biased technologies at home. Over time, however, offshoring raises foreign wages. This increases demand for all firms and makes innovations complementing low-skill workers more profitable. As a result, offshoring can eventually lead to higher wages for everybody and less inequality.

Offshoring of production can have a deep impact on the wages and welfare of workers with different abilities through its effect on technological progress. This column argues that, when labour is sufficiently cheap abroad, firms have incentives to offshore low-skill tasks and invest in skill-biased technologies at home. Over time, however, offshoring raises foreign wages. This increases demand for all firms and makes innovations complementing low-skill workers more profitable. As a result, offshoring can eventually lead to higher wages for everybody and less inequality.

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Additional indexing

Item Type:Scientific Publication in Electronic Form
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:30 September 2014
Deposited On:26 Jan 2015 08:29
Last Modified:05 Apr 2016 18:57
Publisher:Centre for Economic Policy Research
Free access at:Official URL. An embargo period may apply.
Official URL:http://www.voxeu.org/article/offshoring-and-skill-biased-technical-change
Permanent URL: https://doi.org/10.5167/uzh-106858

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