Telemigration and Development: On the Offshorability of Teleworkable Jobs

27 Pages Posted: 20 Oct 2021

See all articles by Richard Baldwin

Richard Baldwin

The Graduate Institute, Geneva

Jonathan I. Dingel

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

Date Written: October 18, 2021

Abstract

The Covid-19 pandemic has introduced huge numbers of employers and employees to remote work. How many of these newly remote jobs will go overseas? We offer a rough quantification based on two observations: 1) offshore work is trade in services, and 2) the number of telemigrants is the volume of this trade divided by the average wage. Combining these with gravity-model estimates, we can roughly predict the number of new telemigrants that would arise from lower barriers to trade in services. Telemigration seems unlikely to be transformative when it comes to the development paths of most emerging economies. The baseline service trade flows are modest, and the standard gravity model restricts modest changes to have modest impacts. There are no tipping points in structural gravity models. Finally, we propose a simple model of telemigration in which small changes can have large consequences. The key is to assume that latent comparative advantage takes a different shape than typically assumed in quantitative trade models. Given this, small changes in trade costs can generate large and asymmetric increases in the exports of service tasks from low-wage nations.

JEL Classification: F1,J2

Suggested Citation

Baldwin, Richard and Dingel, Jonathan I., Telemigration and Development: On the Offshorability of Teleworkable Jobs (October 18, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-121, Available at SSRN: https://ssrn.com/abstract=3945851 or http://dx.doi.org/10.2139/ssrn.3945851

Richard Baldwin

The Graduate Institute, Geneva ( email )

Geneva
United States

Jonathan I. Dingel (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://www.jdingel.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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