Trading tasks: A simple theory of offshoring

Gene M. Grossman, Esteban Rossi-Hansberg

Research output: Contribution to journalArticlepeer-review

1021 Scopus citations

Abstract

We propose a theory of the global production process that focuses on tradeable tasks, and use it to study how falling costs of offshoring affect factor prices in the source country. We identify a productivity effect of task trade that benefits the factor whose tasks are more easily moved offshore. In the light of this effect, reductions in the cost of trading tasks can generate shared gains for all domestic factors, in contrast to the distributional conflict that typically results from reductions in the cost of trading goods.

Original languageEnglish (US)
Pages (from-to)1978-1997
Number of pages20
JournalAmerican Economic Review
Volume98
Issue number5
DOIs
StatePublished - Dec 2008

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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