[Econmaster2012] Research Seminar in Economics-Announcement

[Johannes Pfeifer]

Dear All,

 

we are happy to announce the following  Research Seminar in Economics to
take place on Tuesday, October 23rd  at  18:00 - 19:30 in room E03, ground
floor, Mohlstraße 36.

 

Presenter:  Gino Gancia – CREI, Barcelona

 

Title:  " Offshoring and Directed Technical Change"

           (joint work with Daron Acemoglu and Fabrizio Zilibotti)

 

Abstract:

 

We study the effects of offshoring on wages, welfare and inequality through
its impact 

on technology. To this end, we introduce directed technical change into a
model of task-

based production and offshoring. A unique final good is produced by
combining a skilled

and an unskilled intermediate good, each produced from a continuum of tasks.
Offshoring

takes the form of some of these tasks being transferred from a
skill-abundant West to a

skill-scarce East. Pro.t maximization determines both the equilibrium level
of offshoring

and the rate at which the productivities of skilled and unskilled workers
improve. On the

one hand, by increasing the price of skill-intensive products, offshoring
induces skill-biased

technological change. On the other, it also expands the market size for
technologies comple-

menting unskilled labor. In the empirically more relevant case, starting
from low levels, an

increase in offshoring opportunities triggers a transition with falling real
wages for unskilled

workers in the West, skill-biased technical change and rising skill premia
worldwide. When

the extent of offshoring becomes sufficiently large, instead, further
increases in offshoring

induce unskilled-labor biased technical change and reduce the long-run skill
premium. In-

terestingly, wage inequality is highest for relatively low volumes of
intermediate good trade.

The transitional dynamics also suggest that offshoring and technological
change are sub

stitutes in the short run, but complements in the long run. Finally, we
provide conditions

under which offshoring improves not only the welfare of workers in the East,
but also those

of both skilled and unskilled workers in the West.

 

 

Regards,

 

Prof. Dr. Johannes Pfeifer

 

--

Johannes Pfeifer

Department of Economics

University of Tuebingen

Mohlstrasse 36

72074 Tuebingen

Germany

Phone: +49 7071 2974137

 

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