Offshoring and occupational specificity of human capital

Review of Economic Dynamics, 2014, vol. 17, issue 4, 780-798

Abstract: I document that workers in newly tradable service occupations possess more occupation-specific human capital and are more highly educated than workers in previously tradable occupations. Motivated by this observation, I develop a dynamic equilibrium model with labor market frictions and specific human capital to study the labor adjustment process after a trade shock. When calibrated to match the increase in U.S. trade between 1990 and 2010, the model suggests that (1) output increases immediately after a trade shock and converges quickly to the steady state; (2) labor market institutions likely play a larger role in the adjustment process than specific human capital; (3) the short run distributional effects are small if the labor market is flexible, even in the presence of specific human capital. (Copyright: Elsevier)

Keywords: Offshoring; Sectoral labor reallocation; Human capital (search for similar items in EconPapers)
JEL-codes: E24 F16 J24 J62 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.red.2013.12.002

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