Offshoring and Directed Technical Change
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mac.20130302.pdf
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Author(s)
Gancia, Gino
Zilibotti, Fabrizio
Acemoglu, K. Daron
Date Issued
July 2015
Journal
American Economic Journal: Macroeconomics
Publisher
American Economic Association
Citation
Acemoglu, Daron, Gino Gancia, and Fabrizio Zilibotti. “Offshoring and Directed Technical Change.” American Economic Journal: Macroeconomics 7, no. 3 (July 2015): 84–122. © 2015 American Economic Association
Version
Final published version
Abstract
We study the implications of offshoring on innovation, technology, and wage inequality in a Ricardian model with directed technical change. Profit maximization determines both the extent of offshoring and the direction of technological progress. A fall in the offshoring cost induces technical change with an ambiguous factor bias. When the initial cost of offshoring is high, an increase in offshoring opportunities causes a fall in the real wages of unskilled workers in industrial countries, skill-biased technical change and rising skill premia. When the offshoring cost is sufficiently low, instead, offshoring induces technical change biased in favor of the unskilled workers. (JEL J24, J31, L24, O33)
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/MAC.20130302
