Offshoring in a Knowledge Economy

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Offshoring in a Knowledge Economy

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Title: Offshoring in a Knowledge Economy
Author: Rossi-Hansberg, Esteban; Garicano, Luis; Antras, Pol

Note: Order does not necessarily reflect citation order of authors.

Citation: Antras, Pol, Luis Garicano, and Esteban Rossi-Hansberg. 2006. Offshoring in a knowledge economy. Quarterly Journal of Economics 121(1): 31-77.
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Abstract: How does the formation of cross-country teams affect the organization of work and the structure of wages? To study this question, we propose a theory of the assignment of heterogeneous agents into hierarchical teams, where less skilled agents specialize in production and more skilled agents specialize in problem solving. We first analyze the properties of the competitive equilibrium of the model in a closed economy, and show that the model has a unique and efficient solution. We then study the equilibrium of a two-country model (North and South), where countries differ in their distributions of ability, and in which agents in different countries can join together in teams. We refer to this type of integration as globalization. Globalization leads to better matches for all southern workers but only for the best northern workers. As a result, we show that globalization increases wage inequality among nonmanagers in the South, but not necessarily in the North. We also study how globalization affects the size distribution of firms and the patterns of consumption and trade in the global economy.
Published Version: http://dx.doi.org/10.1162/qjec.2006.121.1.31
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3196323

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  • FAS Scholarly Articles [6948]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
 
 

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