Does Offshoring Lift All Boats? The Role of Induced Technology Adoption and Innovation
نویسنده
چکیده
This paper proposes and evaluates a mechanism through which imports of unskilled intermediates (offshoring) benefit both skilled and unskilled workers by inducing capital deepening and innovation in developed countries. Data for manufacturing industries in the US over 1974-2005, show that although offshoring increases inequality between skilled and unskilled workers, unskilled workers also gain their employment and wage-bills increase 24% and 25%, respectively, when offshoring doubles. Offshoring also has technology effects equipment-labor ratio and innovation intensity increase 38% and 40%, respectively. Offshoring impacts U.S. workers primarily through these technology variables. Its effects through substitution of unskilled workers are small. JEL Classifications: F16, J31, O33
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