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Working Paper
Immigration and outsourcing: a general equilibrium analysis
We analyze the effects of outsourcing in the presence of a minimum wage by presenting a general-equilibrium model with an oligopolistic export sector and a competitive import-competing sector. An outsourcing tax is politically popular because it switches jobs to unemployed natives. It is also economically sound because it raises national income. An export subsidy may or may not be justified on welfare grounds. Increased international competition has no effect on the level of outsourcing, but the direction of its effect on unemployment and national income depends on the relative factor ...
Working Paper
Efficient organization of production: nested versus horizontal outsourcing
The authors characterize equilibrium and efficient modes of production by comparing nested (vertical) outsourcing with horizontal outsourcing. Nested outsourcing is found to be inefficient unless the cost of monitoring outsourced production lines increases sharply with the number of subcontractors and not only with the number of outsourced components. They characterize a market failure in which nested outsourcing is selected when the case dictates that horizontal outsourcing is the efficient outsourcing mode. This failure occurs at an intermediate range of the costs of monitoring outsourcing ...
Journal Article
Outsourcing, firm size, and product complexity: evidence from credit unions
Outsourcing business services is a key concern in the modern economy. Focusing on data processing services for credit unions from 1994 to 2003, the authors find that both credit union size and the diversity of their product offerings influence the propensity to outsource. The results suggest that simple scale-economy-based explanations for outsourcing may be inadequate.
Journal Article
Outsourcing by financial services firms: the supervisory response
This Economic Letter reviews both the supervisory concerns and the practices that have arisen in response to the expansion of outsourcing by financial services firms. Government supervisors have adopted general guidelines regarding how the inherent risks should be identified and mitigated. For the U.S. banking industry in particular, supervisors have established explicit procedures for monitoring the outsourcing activities of depository institutions to technology service providers.
Journal Article
Globalization: threat or opportunity for the U.S. economy?
This Economic Letter is adapted from remarks delivered to the Hawaii Society of Investment Professionals in Honolulu on April 29, 2004.
Working Paper
The asymmetric effects of tariffs on intra-firm trade and offshoring decisions
This paper studies the effects of tariffs on intra-firm trade. Building on the Antrs and Helpman (2004) North-South theoretical framework, I show that higher Northern tariffs reduce the incentives for outsourcing and offshoring, while higher Southern tariffs have the opposite effects. I also show that increased offshoring and outsourcing imply an increase in the ratio of Northern intra-firm imports to total imports, which is an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant tariffs, I find robust evidence to support the model's ...
Briefing
Understanding the \\"job-loss recovery\\"
This Public Policy Brief presents analysis of the labor market by economic research staff at the Federal Reserve Bank of Boston. It is based on materials originally presented to the Board of Directors of the Boston Fed on April 8, 2004, with selective updates incorporating data reported in early June. Contributors to this brief include David DeRemer, Jeffrey C. Fuhrer, Kristina Johnson, Jane Sneddon Little, Radoslav Raykov, Scott Schuh, Geoffrey M.B. Tootell, Robert Triest, and Anne van Grondelle. Views expressed in this brief do not necessarily reflect the views of the Federal Reserve System.
Working Paper
Outsourcing business services and the role of central administrative offices
In this paper, I study whether there is any evidence that the market scale surrounding a central administrative office (CAO), which includes corporate headquarters, influences a firm's cost-effectiveness in procuring business services. By linking plant-level data from the 1992 Annual Survey of Manufactures with CAO information from the Survey of Auxiliary Establishments, I examine manufacturing plants' practice of outsourcing services in relation to the size of the local service market surrounding the plant and that surrounding the plant's CAO. I found statistically significant evidence that ...
Conference Paper
The impact of information asymmetry on debt pricing and maturity