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http://ssrn.com/abstract=694482
 
 

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Offshoring in a Knowledge Economy


Pol Antras


Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Luis Garicano


University of Chicago - Booth School of Business - Economics; Centre for Economic Policy Research (CEPR)

Esteban Rossi-Hansberg


Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

April 2005

Harvard Institute of Economic Research Discussion Paper No. 2067

Abstract:     
How does the formation of cross-country teams affect the organization of work an the structure of wages? To study this question we propose a theory of the assignmenof 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 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.

Number of Pages in PDF File: 97

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Date posted: March 29, 2005  

Suggested Citation

Antras, Pol and Garicano, Luis and Rossi-Hansberg, Esteban, Offshoring in a Knowledge Economy (April 2005). Harvard Institute of Economic Research Discussion Paper No. 2067. Available at SSRN: http://ssrn.com/abstract=694482 or http://dx.doi.org/10.2139/ssrn.694482

Contact Information

Pol Antras (Contact Author)
Harvard University - Department of Economics ( email )
Littauer Center
Room 230
Cambridge, MA 02138
United States
617-495-1236 (Phone)
617-495-8570 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Luis Garicano
University of Chicago - Booth School of Business - Economics ( email )
Graduate School of Business
1101 East 58th Street
Chicago, IL 60637
United States
773-834-2862 (Phone)
773-702-0458 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Esteban Alejandro Rossi-Hansberg
Princeton University - Department of Economics ( email )
Princeton, NJ
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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