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The concealment of income, wealth and profits in tax havens has brought the topic of offshoring into public debate, but as John Urry shows in this important new book offshoring is a much more pervasive feature of contemporary societies. These often secretive activities offshore also involve relations of work, finance, pleasure, waste, energy and security. Powerful and pervasive offshore worlds have been generated, posing huge challenges both for governments and for citizens. This book documents the various patterns of offshoring Ð of the economy, sociability, politics and the environment. In

We set up a two-country general equilibrium model, in which heterogeneous firms from one country (the source country) can offshore routine tasks to a low-wage host country. The most productive firms self-select into offshoring, and the impact on welfare in the source country can be positive or negative, depending on the share of firms engaged in offshoring. Each firm is run by an entrepreneur, and inequality between entrepreneurs and workers as well as intra-group inequality among entrepreneurs is higher with offshoring than in autarky. All results hold in a model extension with firm-level rent sharing, which results in aggregate unemployment. In this extended model, offshoring furthermore has non-monotonic effects on unemployment and intra-group inequality among workers. The paper also offers a calibration exercise to quantify the effects of offshoring. -- Heterogeneous Firms ; Income Inequality

In this paper, in order to study the impact of offshoring on sectoral and economywide rates of unemployment, we construct a two sector general equilibrium model in which labor is mobile across the two sectors, and unemployment is caused by search frictions. We find that, contrary to general perception, wage increases and sectoral unemployment decreases due to offshoring. This result can be understood to arise from the productivity enhancing (cost reducing) effect of offshoring. If the search cost is identical in the two sectors, or even if the search cost is higher in the sector which experiences offshoring, the economywide rate of unemployment decreases. We also find multiple equilibrium outcomes in the extent of offshoring and therefore, in the unemployment rate. Furthermore, a firm can increase its domestic employment through offshoring. Also, such a firm's domestic employment can be higher than a firm that chooses to remain fully domestic. When we modify the model to disallow intersectoral labor mobility, the negative relative price effect on the sector in which firms offshore some of their activity becomes stronger. In such a case, it is possible for this effect to offset the positive productivity effect, and result in a rise in unemployment in that sector. In the other sector, offshoring has a much stronger unemployment reducing effect in the absence of intersectoral labor mobility than in the presence of it. Finally, allowing for an endogenous number of varieties provides an additional indirect channel, through which sectoral unemployment goes down due to the entry of new firms brought about by offshoring.

AbstractIn this article, I provide an overview of the growing literature on offshoring and wages. I begin by documenting the recent growth in goods and service offshoring. I then discuss the mechanisms through which offshoring is likely to affect wages and review the empirical literature on the impact of offshoring on both the relative and absolute wage of low‐skilled workers in advanced economies. Lastly, I conclude by providing some thoughts on what governments can do to address the labour market consequences of offshoring.

What have Manchester United Football Club, Trafigura, the island of St Barts, pirates, hedge funds, Radio Caroline, the only seven star hotel in the world, The Waste Makers, Enron and extraordinary rendition have in common? They all find a place in this well-documented and impressive work, which unveils the networks of concealment, wealth, evasion, excess and power which lie at the root of the concept of offshoring. Indeed, Urry reserves some harsh words to his subject: "Offshoring erodes 'democracy' and, more generally, notions of fairness within and between societies" (p. 10). He also describes it as "an account that emphasizes avoidance, rule-breaking, irresponsibility, and secrets as the 'rich class' remade the world in its interests". Offshoring is about how the rich are allowed and encouraged to steal a couple of marches over the rest, which, at little cost, enable them to become even richer. The writer also refers to the "dark side" of the new class warfare which is being waged, "enabling the rise and rise of the rich class". ; N/A

Several papers have proven that the institutional environment of the receiving country can influence the choice to establish an FDI. Property rights theory suggests that contract enforcement matters differentially across sectors. This paper is the first attempt to test whether institutions matter differentially across different sectors in FDI decision. Using data on U.S. Direct Investment Abroad, I find that institutional characteristics of the country and the industry positively affect the volume of offshoring between U.S. companies and their affiliates. The suggested argument is stronger for the intermediate products, while the evidence is weak for products ready for sale.