A model of occupational choice, offshoring and immigration

Document Type

Article

Publication Date

2-1-2019

Abstract

This paper develops a two-country model of offshoring and immigration with occupational choice and endogenous firm productivity. Individuals in Home choose to become entrepreneurs or workers, whereas those in Foreign can only be employed as workers. Entrepreneurs produce output using a fixed set of tasks that can be performed locally or abroad. The model predicts that pro-immigration policies increase the number of entrepreneurs, raise productivity, and improve the aggregate welfare. It also predicts that lowering offshoring costs generates job polarization and welfare polarization, but improves the aggregate welfare.

Publication Source (Journal or Book title)

Review of International Economics

First Page

267

Last Page

289

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