On The East-West Trade in Skill Intensive Tasks: Theory vs. Evidence

Abstract

In keeping with an already entrenched paradigm, international trade in tasks exerts upward pressure upon skilled workers' wages in both home and host countries. Yet certain empirical evidence from intra-European trade shows that sometimes things occur in reverse, that is high skilled workers' wages in home countries may decline as a result of offshoring, an outcome that looks like an inverse "maquiladora effect". I try to show that such deviations do not fly in the face of mainstream theory but rather, they reflect the different conditions under which offshoring is performed today as compared to the ones prevailing two decades ago.