Strategic sourcing and wage bargaining

Sly, Nicholas; Soderbery, Anson

doi:10.1016/j.jdeveco.2014.04.005

Cited by 12 publications

(6 citation statements)

References 41 publications

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“…If these countries are setting their minimum wage, then the equilibrium might be that of no intervention at all as otherwise a 16. An example of a paper on strategic sourcing to multiple countries is Sly and Soderbery (2014). country can lower its binding minimum wage below those of other countries to become the recipient of all the offshoring.…”

Section: Discussionmentioning

confidence: 99%

Consequences of Offshoring to Developing Nations: Labor‐market Outcomes, Welfare, and Corrective Interventions

et al. 2019

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Our parsimonious two‐country (developed country and developing country) model of offshoring provides nuanced results. These include cases where wages monotonically improve, as well as where wages exhibit an inverted‐U relationship with offshoring cost reductions. We identify conditions under which these relationships hold. Since global welfare always rises with improvements in offshoring technology, we find that there is a role for a minimum wage (alternatively, wage tax) in the developing country. We derive such a policy's optimal level. There is also the possibility of a developed country optimal offshoring tax for extracting terms‐of‐trade benefits. We, finally, analyze the two‐country Nash equilibrium in policies. (JEL F11, F13, F16, F66, O19, O24)

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Section: Discussionmentioning

confidence: 99%

Consequences of Offshoring to Developing Nations: Labor‐market Outcomes, Welfare, and Corrective Interventions

et al. 2019

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“…As skills and infrastructure improve in the developing nation, less labour is required to achieve the same aim. National differences in wage bargaining power, along with average wage levels, can influence the decisions multinationals make about where to locate production (Sly and Soderbery, 2014). Jobs move from nation to nation; nations which were once the source in global supply chains start in turn to source materials and production from other nations (Kizu et al, 2019).…”

Section: The Role Of Offshoring On Developmentmentioning

confidence: 99%

Onshoring Through Automation; Perpetuating Inequality?

Studley

2021

Front. Robot. AI

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Many analyses of the ethical, legal and societal impacts of robotics are focussed on Europe and the United States. In this article I discuss the impacts of robotics on developing nations in a connected world, and make the case that international equity demands that we extend the scope of our discussions around these impacts. Offshoring has been instrumental in the economic development of a series of nations. As technology advances and wage share increases, less labour is required to achieve the same task, and more job functions move to new areas with lower labour costs. This cascade results in a ladder of economic betterment that is footed in a succession of countries, and has improved standards of living and human flourishing. The recent international crisis precipitated by COVID-19 has underlined the vulnerability of many industries to disruptions in global supply chains. As a response to this, “onshoring” of functions which had been moved to other nations decreases risk, but would increase labour costs if it were not for automation. Robotics, by facilitating onshoring, risks pulling up the ladder, and suppressing the drivers for economic development. The roots of the economic disparities that motivate these international shifts lie in many cases in colonialism and its effects on colonised societies. As we discuss the colonial legacy, and being mindful of the justifications and rationale for distributive justice, we should consider how robotics impacts international development.

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“…Feenstra (), Berry et al. (), Goldberg (), Blonigen and Soderbery () and Sly and Soderbery (), define varieties by their model (e.g., Dodge Ram) and, if applicable, country of origin. However, facilitated by our dataset, we can do so at a finer level of aggregation.…”

Section: Datamentioning

confidence: 99%

“… Other papers on auto trade and investment include Feenstra (), Berry et al. (), Goldberg (), Goldberg and Verboven (), Blonigen and Soderbery () and Sly and Soderbery (). In terms of the broad literature on offshoring, our work is motivated by Feenstra and Hanson (), who evaluate the effect of an increase in capital stock in the south on relative wages in the north and south, and Keller and Yeaple (), who develop an information based model of sourcing tasks.…”

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confidence: 99%

Relaxing CAFE: Foreign direct investment, NAFTA and domestic product standards

McCalman

Spearot

2015

Canadian J of Economics

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This paper studies the effects of domestic product standards on the offshoring behavior of automotive firms. In particular, we examine an important non-tariff barrier to trade within US fuel economy policy -the Corporate Average Fuel Economy (CAFE) "Two-Fleet Rule". By leveraging the removal of the two-fleet rule upon implementation of NAFTA, and exploiting a policy discontinuity based on vehicle characteristics, we present evidence that the costs of offshoring were reduced to a larger degree for varieties that were subject to US fuel economy rules. Specifically, we estimate that prices fell between 5-10% for varieties subject to the CAFE Two-Fleet rule relative to varieties that were exempt from the rule. These effects are persistent, not present for manufacturers that did not offshore prior to NAFTA, and are robust to variety-specific trends. These effects also reconcile the post-NAFTA differences in implied compliance costs between cars and trucks for our treatment manufacturer (Chrysler). Overall, the results highlight the potential costs of regional enforcement of otherwise location-neutral product standards, which may act as a barrier to natural patterns of efficient specialization.

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Strategic sourcing and wage bargaining

Cited by 12 publications

References 41 publications

Consequences of Offshoring to Developing Nations: Labor‐market Outcomes, Welfare, and Corrective Interventions

Consequences of Offshoring to Developing Nations: Labor‐market Outcomes, Welfare, and Corrective Interventions

Onshoring Through Automation; Perpetuating Inequality?

Relaxing CAFE: Foreign direct investment, NAFTA and domestic product standards

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