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</o:shapelayout></xml><![endif]--></head><body lang=DE link=blue vlink=purple><div class=WordSection1><p class=MsoPlainText><span lang=EN-US>Dear All,<o:p></o:p></span></p><p class=MsoPlainText><span lang=EN-US><o:p> </o:p></span></p><p class=MsoPlainText><span lang=EN-US>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.<o:p></o:p></span></p><p class=MsoPlainText><span lang=EN-US><o:p> </o:p></span></p><p class=MsoPlainText><span lang=EN-US>Presenter: Gino Gancia – CREI, Barcelona<o:p></o:p></span></p><p class=MsoPlainText><span lang=EN-US><o:p> </o:p></span></p><p class=MsoPlainText><span lang=EN-US>Title: " Offshoring and Directed Technical Change"<o:p></o:p></span></p><p class=MsoPlainText><span lang=EN-US> (joint work with Daron Acemoglu and Fabrizio Zilibotti)</span><span lang=EN-US><o:p></o:p></span></p><p class=MsoPlainText><span lang=EN-US><o:p> </o:p></span></p><p class=MsoPlainText><span lang=EN-US>Abstract:<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'><o:p> </o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>We study the effects of offshoring on wages, welfare and inequality through its impact <o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>on technology. To this end, we introduce directed technical change into a model of task-<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>based production and offshoring. A unique final good is produced by combining a skilled<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>and an unskilled intermediate good, each produced from a continuum of tasks. Offshoring<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>takes the form of some of these tasks being transferred from a skill-abundant West to a<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>skill-scarce East. Pro.t maximization determines both the equilibrium level of offshoring<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>and the rate at which the productivities of skilled and unskilled workers improve. On the<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>one hand, by increasing the price of skill-intensive products, offshoring induces skill-biased<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>technological change. On the other, it also expands the market size for technologies comple-<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>menting unskilled labor. In the empirically more relevant case, starting from low levels, an<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>increase in offshoring opportunities triggers a transition with falling real wages for unskilled<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>workers in the West, skill-biased technical change and rising skill premia worldwide. When<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>the extent of offshoring becomes sufficiently large, instead, further increases in offshoring<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>induce unskilled-labor biased technical change and reduce the long-run skill premium. In-<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>terestingly, wage inequality is highest for relatively low volumes of intermediate good trade.<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>The transitional dynamics also suggest that offshoring and technological change are sub<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>stitutes in the short run, but complements in the long run. Finally, we provide conditions<o:p></o:p></span></p><p class=MsoNormal style='text-autospace:none'><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>under which offshoring improves not only the welfare of workers in the East, but also those<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>of both skilled and unskilled workers in the West.<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'><o:p> </o:p></span></p><p class=MsoNormal><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'><o:p> </o:p></span></p><p class=MsoNormal><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>Regards,<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'><o:p> </o:p></span></p><p class=MsoNormal><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'>Prof. Dr. Johannes Pfeifer<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='font-size:10.0pt;font-family:TTdcr10'><o:p> </o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>--<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>Johannes Pfeifer<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>Department of Economics<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>University of Tuebingen<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>Mohlstrasse 36<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>72074 Tuebingen<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>Germany<o:p></o:p></span></p><p class=MsoNormal><span lang=EN-US style='mso-fareast-language:DE'>Phone: +49 7071 29</span><span style='mso-fareast-language:DE'>74137<o:p></o:p></span></p><p class=MsoNormal><o:p> </o:p></p></div></body></html>