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Full-Text Articles in Social and Behavioral Sciences
Offshoring, Unemployment, And Welfare With Risk Averse Workers, Priya Ranjan
Offshoring, Unemployment, And Welfare With Risk Averse Workers, Priya Ranjan
Priya Ranjan
This paper studies the welfare and policy implications of offshoring when risk averse workers face the risk of unemployment. If offshored inputs can be easily substituted for domestic workers, then offshoring reduces wages and increases unemployment. In this situation, in the absence of any government intervention offshoring not only reduces the welfare of workers but could reduce aggregate welfare as well if workers are highly risk averse and the markets for insurance against unemployment risk are missing. In addition to unemployment insurance, the role of employment protection policies- severance payments and administrative cost of firing -in protecting workers against the …
O¤Shoring, Unemployment, And Welfare With Risk Averse Workers, Priya Ranjan
O¤Shoring, Unemployment, And Welfare With Risk Averse Workers, Priya Ranjan
Priya Ranjan
This paper studies the welfare and policy implications of offshoring when risk averse workers face the risk of unemployment. If offshored inputs can be easily substituted for domestic workers, then offshoring reduces wages and increases unemployment. In this situation, in the absence of any government intervention offshoring not only reduces the welfare of workers but could reduce aggregate welfare as well if workers are highly risk averse and the markets for insurance against unemployment risk are missing. In addition to unemployment insurance, the role of employment protection policies- severance payments and administrative cost of firing -in protecting workers against the …
Offshoring And Labor Market Outcomes In The Presence Of Collective Bargaining, Priya Ranjan
Offshoring And Labor Market Outcomes In The Presence Of Collective Bargaining, Priya Ranjan
Priya Ranjan
This paper studies the implications of offshoring for unemployment and wages in a search unemployment framework when the wage is determined by collective bargaining. It shows that there is a non-monotonic relationship between the cost of offshoring and unemployment but the relationship between the cost of offshoring and wage is monotonic. Starting from a high cost of offshoring, a decrease in the cost of offshoring reduces unemployment first and then increases it. The wage is monotonically increasing in the cost of offshoring. Comparing autarky equilibrium with offshoring equilibrium, it finds that for a large range of the cost of offshoring, …
Spillovers Across Labor Markets In Search Models: Effects Of "Animal Spirits" And Offshoring, Devashish Mitra, Priya Ranjan
Spillovers Across Labor Markets In Search Models: Effects Of "Animal Spirits" And Offshoring, Devashish Mitra, Priya Ranjan
Priya Ranjan
We study the effects of additional distortions or shocks, such as a fair-wage constraint and/or the possibility of offshoring unskilled jobs, in a two-factor general equilibrium model of unemployment with search frictions. While the direct point of impact of such shocks is on unskilled workers, we also find interesting indirect spillover effects on skilled workers. A binding fair-wage constraint increases the unskilled unemployment rate and can at the same time lead to a higher unemployment rate and a lower wage for skilled workers, as compared to an equilibrium where fairness considerations are absent or non-binding. Introducing offshoring of unskilled jobs …
Offshoring And Unemployment:The Role Of Search Frictions And Labor Mobility, Devashish Mitra, Priya Ranjan
Offshoring And Unemployment:The Role Of Search Frictions And Labor Mobility, Devashish Mitra, Priya Ranjan
Priya Ranjan
In a two-sector, general-equilibrium model with labor-market search frictions, we find that wage increases and sectoral unemployment decreases upon offshoring in the presence of perfect intersectoral labor mobility. If, as a result, labor moves to the sector with the lower (or equal) vacancy costs, there is an unambiguous decrease in economywide unemployment. With imperfect intersectoral labor mobility, unemployment in the offshoring sector can rise, with an unambiguous unemployment reduction in the non-offshoring sector. Imperfect labor mobility can result in a mixed equilbrium in which only some firms in the industry offshore, with unemployment in this sector rising.
Offshoring And Unemployment, Devashish Mitra, Priya Ranjan
Offshoring And Unemployment, Devashish Mitra, Priya Ranjan
Priya Ranjan
In this paper, in order to study the impact of offshoring on sectoral and economywide rates of unemployment, we construct a two sector general equilibrium model in which labor is mobile across the two sectors, and unemployment is caused by search frictions. We find that, contrary to general perception, wage increases and sectoral unemployment decreases due to offshoring. This result can be understood to arise from the productivity enhancing (cost reducing) effect of offshoring. If the search cost is identical in the two sectors, or even if the search cost is higher in the sector which experiences offshoring, the economywide …