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Managerial versus Production Wages: Offshoring, Country Size, and Endowments

Author

Listed:
  • Sebastian Benz
  • Wilhelm Kohler
Abstract
We explore the role of trade in differentiated final goods as well as offshoring of tasks for inequality both within and between countries, emphasizing the distinction between managerial and production labour. We extend Grossman and Rossi‐Hansberg (2012), where task trade is driven by external economies of scale, by considering asymmetric endowments. Identifying possible equilibrium patterns of task trade, we find little scope for two‐way trade if endowments are asymmetric. Our numerical simulations identify non‐monotonicities between the level of offshoring and measures of within‐country as well as between‐country inequality. Rémunérations des gestionnaires et des travailleurs : délocalisation, taille du pays, et dotation de facteurs. On explore le rôle du commerce de biens différenciées finaux ainsi que celui de la délocalisation des tâches dans l'explication de l'inégalité, à la fois intra et entre pays, en mettant l'accent sur la distinction entre travail de gestion et travail de production. On développe le modèle de Grossman et Rossi‐Hansberg (2012) où le déplacement des tâches est enclenché par les économies d'échelle externes, en considérant les dotations asymétriques de facteurs. En identifiant les patterns d'équilibres possibles du déplacement des tâches, on trouve peu de possibilité pour un commerce bilatéral si les dotations sont asymétriques. Des simulations numériques identifient des relations non‐monotones entre le niveau de délocalisation et des mesures d'inégalités intra‐pays ou entre pays.

Suggested Citation

  • Sebastian Benz & Wilhelm Kohler, 2014. "Managerial versus Production Wages: Offshoring, Country Size, and Endowments," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(1), pages 250-271, February.
    • Handle: RePEc:wly:canjec:v:47:y:2014:i:1:p:250-271
    DOI: 10.1111/caje.12073
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    References listed on IDEAS

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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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