Who's to blame for the insecurity faced by American workers? Two recent papers undermine the popular view.
First is this paper (pdf) by Devashish Mitra and Priya Ranjan. They show that, in a general equilibrium model, offshoring can increase wages and reduce unemployment simply (and here I do violence to the sophistication of their model) because it cuts costs and so raises demand.
These two papers by Mary Amiti and Shang-Jin Wei sugest that there's some empirical evidence for this, or at least against the popular view that offshoring destroys jobs.
Greg Mankiw, it seems, was right.
But if offshoring is not to blame for the weak position of American workers, what is?
Feminization - at least in part. This paper from the Levy Economics Institute says:
The growing incorporation of women into market work during the 1982-97 period contributed to the decline in the aggregate wage share.
The authors estimate that the supply of cheap female labour explains around one-third of the fall in the wage share.
This raises the question. Why are American men so quick to blame offshoring and foreigners for their (perceived) trouble, but not women or exploitative capitalists?
Yeah, but it not "American men so quick to blame offshoring" it's two-a-penny sound-bite spewing protectionist and interventionist politicians (and probably trade union leaders as well).
I have never heard any real live person in the pub or round the dinner table say anything bad (or good for that matter) about off-shoring.
Posted by: Mark Wadsworth | May 24, 2007 at 11:50 AM
"Why are American men so quick to blame offshoring and foreigners for their (perceived) trouble, but not women or exploitative capitalists?"
Tabloids seem to prefer blaming foreigners over totty and the elite.
Posted by: Chris | May 24, 2007 at 02:45 PM
Hen-pecked.
Posted by: dearieme | May 24, 2007 at 10:54 PM
Run that past me again? Employing extra people overseas on low wages is good for jobs market, but employing extra women on low wages is bad for it?
Posted by: Fanny Herring | May 25, 2007 at 10:43 AM