TY  - JOUR
AU  - Antràs,Pol
AU  - Garicano,Luis
AU  - Rossi-Hansberg,Esteban
TI  - Offshoring in a Knowledge Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11094
PY  - 2005
Y2  - January 2005
UR  - http://www.nber.org/papers/w11094
L1  - http://www.nber.org/papers/w11094.pdf
N1  - Author contact info:
Pol Antràs
Department of Economics
Harvard University
1805 Cambridge Street
Littauer Center 207
Cambridge, MA 02138
Tel: 617/495-1236
Fax: 617/495-8570
E-Mail: pantras@fas.harvard.edu

Luis Garicano
Departments of Management and Economics and
Centre for Economic Performance
London School of Economics
Houghton Street
London WC2A 2AE
United Kingdom
E-Mail: garicano@lse.ac.uk

Esteban Rossi-Hansberg
Princeton University
Department of Economics
Fisher Hall
Princeton, NJ 08544-1021
Tel: 609/2584024
Fax: 650/725-5702
E-Mail: erossi@princeton.edu
AB  - How does the formation of cross-country teams affect the organization of work and the structure of wages? To study this question we propose a theory of the assignment of heterogeneous agents into hierarchical teams, where less skilled agents specialize in production and more skilled agents specialize in problem solving. We first analyze the properties of the competitive equilibrium of the model in a closed economy, and show that the model has a unique and efficient solution. We then study the equilibrium of a two-country model (North and South), where countries differ in their distributions of ability, and in which agents in different countries can join together in teams. We refer to this type of integration as globalization. Globalization leads to better matches for all southern workers but only for the best northern workers. As a result, we show that globalization increases wage inequality in the South but not necessarily in the North. We also study how globalization affects the size distribution of firms and the patterns of consumption and trade in the global economy.
ER  -