Offshoring, employment, and aggregate demand

Schröder, E.

doi:10.1007/s00191-018-0582-4

Offshoring, employment, and aggregate demand

Title

Offshoring, employment, and aggregate demand

Author

Schröder, E. (TU Delft Economics of Technology and Innovation)

Date

2018

Abstract

The article uses a demand-constrained small-open-economy model in the tradition of Keynes and Kalecki to study the effects of offshoring on aggregate demand and domestic employment. Offshoring is represented as labor-saving import-using technical change. The results depend on the behavior of the markup on unit costs. If higher markups absorb the competitiveness gain, the scale effect of labor demand is negative, and offshoring unambiguously reduces domestic demand and employment. If the markup remains constant, the net effect of offshoring on domestic demand and employment is ambiguous; it depends crucially on the price elasticity of exports.

Subject

Aggregate demand
Germany
Global value chains
Labor demand
Offshoring
Trade flows
Unemployment

To reference this document use:

http://resolver.tudelft.nl/uuid:352f3c6f-b06b-4e03-91c2-27d38c49acd1

DOI

https://doi.org/10.1007/s00191-018-0582-4

ISSN

0936-9937

Source

Journal of Evolutionary Economics, 1-26

Part of collection

Institutional Repository