We develop a two-sector model to explore how skill distribution affects trade in final goods and offshoring. We show that when countries differ in skill abundance, wage disparities create opportunities for offshoring. In contrast, when countries vary in skill diversity but share the same median skill, symmetric skill distributions render offshoring infeasible. We also find that offshoring can result in relative prices under offshoring being lower than each country's autarky price if the gap between the median skill levels of two countries is high enough. Finally, we demonstrate that an individual's industry of employment primarily determines how they are affected by trade in final goods, whereas their occupation (tasks) shapes how they are impacted by offshoring.
Hiroshi Goto, Yan Ma, and Nobuyuki Takeuchi
主担当箇所: モデルの解析と証明
