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Does Outsourcing Always Benefit Skilled Labor?
Author(s) -
Hsu KuangChung
Publication year - 2011
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2011.00964.x
Subject(s) - outsourcing , collar , labour economics , wage , blue collar , wage inequality , product (mathematics) , economics , business , low wage , efficiency wage , knowledge process outsourcing , finance , marketing , geometry , mathematics
This paper builds a dynamic product cycle model with three kinds of labor inputs—scientists, white‐collar workers, and blue‐collar workers—and producer heterogeneity to find an explanation for why outsourcing did not cause wage inequality in the 1970s. According to the theoretical model, outsourcing decreases the wages of white‐collar workers and the relative wages of white‐collar workers to blue‐collar workers in the outsourcing home country if outsourcing industries are blue‐collar worker intensive compared with non‐outsourcing industries. Scientists who conduct research and development always benefit from outsourcing.