Essays on offshoring

• Autor(a) principal: Gay, Matheus Sesso
• Data de Publicação: 2020
• Tipo de documento: Tese
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: http://hdl.handle.net/10438/29342
• topic: Economic integration; Tariffs; Growth; Offshoring; Wages; Labor market; Integração econômica; Tarifas de importação; Crescimento econômico; Salários; Mercado de trabalho; Economia; Integração econômica internacional; Terceirização de serviços no exterior; Desenvolvimento econômico; Mercado de trabalho; Salários

This thesis studies how offshoring process affected growth and wages, as well as how the economy would be impacted if policies designed to hinder the process of global integration took place. The first chapter studies how protective measures can affect output of economies, as well as growth and consumption. The motivation comes from long term declining in trade barriers and transportation costs, as well as development in communication technology, which allowed firms to produce inputs in different places, assembling them together to generate a final good. We build an endogenous growth model with two regions: the North and the South, which differ by their endowment of skills. The North, which represents the United States, is relatively abundant in skilled labor, while the South, which denotes the Chinese economy, is relatively abundant in unskilled labor. Technology is produced in the North but may be adapted or directed to Southern needs, which possibly uses different technologies from the first due to complementary of certain technologies and labor skill endowment.We calibrate the model with U.S. and Chinese aspects and perform a quantitative exercise. Our results suggests that “America First Policy” represented here by the rise in import tariff of US over Chinese goods can reestablish the top position of the first in terms of GDP at PPP. However, distortions generated in relative prices drive down world output and consumption path remains below the one it would have otherwise attained in case of no policy. Growth is impacted to the extent that these measures affect the level of integration between economies. The second chapter is an attempt to better grasp the importance of offshoring on modeling wage distribution in U.S. throughout history. The motivation comes from the belief by many that offshoring process harmed U.S. workers, lowering their wages. We build a model contemplating different occupations and industries, taking into account linkages in the latter, discrimination related to sexist-racist preferences is allowed. Individuals differ by their level of schooling, race and abilities across occupation-industry pairs and choose where to work looking for the highest wage per hour, as in a Roy model. We bring the model to data estimating wage equation structural parameters using U.S. Census from 1970 to 2010 (decennial database), whereas firms parameters and offshoring measure come from I-O tables (1972 - 2007). Based on these parameters, we run a counter factual exercise assuming the economy starts in equilibrium, but at the beginning of next period agents face an offshoring shock, which reduces to zero the amount of intermediate goods imported. Finally, we let workers relocate and compute the new equilibrium, estimating the wage distribution without offshoring. Our main results point to: (i) No effect on wage distribution; (ii) Range of possibilities to relocation matters (making 2010 the most impacted year for several outcomes, followed by 1970 and roughly same impacts for 1980-2000); (iii) Relocation of workers is an important channel on total wage bill variation (roughly 50% is explained by it and the rest by variations in wages); (iv) Most variation in wages come from occupation-industry pairs than industry components, with the first one driving down wages; (v) Generally speaking, impacts in wages are negative, probably arising from a less efficient market allocation as a whole, since no productivity parameter has changed.