Trading Tasks: A Simple Theory of Offshoring
- (pp. 1978-97)
Abstract
We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. In the light of this effect, reductions in the cost of trading tasks can generate shared gains for all domestic factors, in contrast to the distributional conflict that typically results from reductions in the cost of trading goods. (JEL F11, F16)Citation
Grossman, Gene M., and Esteban Rossi-Hansberg. 2008. "Trading Tasks: A Simple Theory of Offshoring." American Economic Review, 98 (5): 1978-97. DOI: 10.1257/aer.98.5.1978JEL Classification
- F11 Neoclassical Models of Trade
- L23 Organization of Production
- L24 Contracting Out; Joint Ventures; Technology Licensing
- M11 Production Management