Outsourcing, Income Distribution, and Unemployment

  • Yabuuchi S
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Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms Abstract This paper examines the effects of outsourcing on employment and unemployment and income distribution in an economy with Harris-Todaro type unemployment. This is because both wages and jobs are important concerns for an economy that engages in outsourcing and consequently experiences widespread unemployment. The main findings of this paper are as follows: (i) If the outsourced factor is not produced domestically, outsourcing increases the rural wage rate (and the expected urban wage rate) and decreases the unemployed-to-employed ratio in the urban area, and it may increase unemployment in the home country, (ii) If the outsourced factor is produced domestically, outsourcing may decrease the rural wage rate (and the expected urban wage rate), and may increase the unemployed-to-employed ratio in the urban area if the rural wage rate is not sensitive to the employment in the rural sectors.

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Yabuuchi, S. (2011). Outsourcing, Income Distribution, and Unemployment. Journal of Economic Integration, 26(4), 705–720. https://doi.org/10.11130/jei.2011.26.4.705

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