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Offshoring and Directed Technical Change

Author(s)
Gancia, Gino; Zilibotti, Fabrizio; Acemoglu, K. Daron
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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)
Date issued
2015-07
URI
http://hdl.handle.net/1721.1/113625
Department
Massachusetts Institute of Technology. Department of Economics
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
ISSN
1945-7707
1945-7715

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