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Business Service, International Outsourcing, And Wage Inequality

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  • CHU-PING LO

    (Department of Agriculture Economics, National Taiwan University, Taipei, Taiwan)

Abstract

This paper adds business services to Feenstra and Hanson’s (1996) model to show that if a country is more prosperous in business services, tending to carry out less international outsourcing activities than it would otherwise. In this model, the more varieties of specialized business services a country endows, the more welfare gains arise in the presence of positive production externalities to the manufacturing sector. Since developed countries are more prosperous in business service sector, this model helps to explain why the impact of opening trade on the dispersion of both wages and unemployment is stronger in developing economies.

Suggested Citation

  • Chu-Ping Lo, 2018. "Business Service, International Outsourcing, And Wage Inequality," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(05), pages 1175-1182, December.
    • Handle: RePEc:wsi:serxxx:v:63:y:2018:i:05:n:s0217590816500132
    DOI: 10.1142/S0217590816500132
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    References listed on IDEAS

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