Offshoring and Directed Technical Change

  title={Offshoring and Directed Technical Change},
  author={Daron Acemoglu and Gino Gancia and Fabrizio Zilibotti},
We study the implications of offshoring on innovation, technology, and wage inequality in a Ricardian model with directed technical change. Profit maximization determines both the extent of offshoring and the direction of technological progress. A fall in the offshoring cost induces technical change with an ambiguous factor bias. When the initial cost of offshoring is high, an increase in offshoring opportunities causes a fall in the real wages of unskilled workers in industrial countries… CONTINUE READING
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