Goyal, Ashima (2005): New technology and labour Markets: Entrants, outsourcing and matching. Published in: The Indian Journal of Labour Economics , Vol. 4, No. 48 (August 2005): pp. 853-868.
Download (252kB) | Preview
The impact of new technology (ICT) on labour markets and welfare is analyzed in a model of matching. First, ICT lowers cost and speed of market access, thus reducing frictions in matching a searching worker to an opportunity. It raises output and lowers the cost of entry for a new firm. The rise in scale of aggregate employment raises productivity. Second, since the net effect of ICT raises the probability of a successful search by workers relative to a successful search by firms, workers share of the match surplus rises. Third, it induces more learning and innovation. Fourth, ICTs allows hitherto excluded segments to access new networks. This reduces the ability of members of an existing network to extract the entire surplus from a new entrant. Finally, it encourages cumulative improvements in technology and skills. More labour-using technological progress is induced. Multiple equilibria are possible, however, due to endogenous choice of training and technology. Therefore investment in training and technology may be at less than socially optimal levels. Policy implications follow.
|Item Type:||MPRA Paper|
|Original Title:||New technology and labour Markets: Entrants, outsourcing and matching|
|Keywords:||outsourcing, distance labour, matching, technology, multiple equilibria|
|Subjects:||J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J61 - Geographic Labor Mobility ; Immigrant Workers
O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes
|Depositing User:||ashima goyal|
|Date Deposited:||25. Aug 2010 13:53|
|Last Modified:||23. Apr 2015 08:42|
Acemoglu, D., 1997, "Training and Innovation in an Imperfect Labour Market", Review of Economic Studies, 64, 445-464.
Basu, K. 2000, Prelude to Political Economy, New York: Oxford University Press.
Chen, Y., J. Ishikawa and Z. Wu, 2004, “Trade Liberalization and Strategic Outsourcing”, Journal of International Economics, 63, 2, July.
David, P.A., 1996, "Formal Standards-Setting for Global Telecommunications and Information Services", Telecommunications Policy, 20, 789-815.
Diamond, P.A., 1982,"Wage Determination and Efficiency in Search Equilibrium", Review of Economic Studies, 49, 217-227.
De long, B, 2002, "New US Paradigm for the Times", Economic Times, July 30.
Dossani, R. and M. Kenney, 2003, "Went for Cost, Stayed for Quality?: Moving the Back Office to India?", Berkeley Roundtable on the International Economy, Working Paper 156, available at http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1020&context=brie
Egger, H. and J. Falkinger, 2003, “The Distributional Effects of International Outsourcing in a 2x2 Production Model”, North American Journal of Economics and Finance, 14(2), 189-206.
Encaoua, D., and A. Hollander, 2002,"Competition Policy and Innovation", Oxford Review of Economic Policy, 18, 63-79. Farrell, J. and P. Klemperer, 2002, "Coordination and Lock-in: Competition with Switching Costs and Network Effects", Handbook of Industrial Organization, Vol.3, (2007) Chapter 5 available at www.paulklemperer.org
Feenstra, R. C. and G. H. Hanson, 1995, “Foreign Investment, Outsourcing and Relative Wages”, NBER working paper 5121.
Gandal, N., 2002, "Compatibility, Standardization, and Network Effects: Some Policy Implications”, Oxford Review of Economic Policy, 18, 80-91.
Gandal, N. and O. Shy, 2001, "Standardization Policy and International Trade”, Journal of International Economics, 53, 363-383.
Global Insight, 2004, “The Impact of Offshore IT and Services Outsourcing on the US Economy and IT Industry”, sponsored by ITAA, available at http://www.itaa.org/eweb/upload/execsum%20final.pdf.
Grossman, G. and E. Helpman, 2002, “Outsourcing in a Global Economy”, NBER working paper 8728.
Hall, B., 2002, "The Assessment: Technology Policy", Oxford Review of Economic Policy, 18, 1-9.
Katz, M.L., and C. Shapiro, 1994, "Systems Competition and Network Effects", Journal of Economic Perspectives, 8, 93-115.
Kuhn, P.J, 2003, “The Internet and Matching in Labour Markets”, in D. C. Jones (ed.) New Economy Handbook, San Diego: Academic Press.
Laing, D., T. Palivos, and P. Wang, 1995, "Learning, Matching, and Growth", Review of Economic Studies, 62, 115-129.
Mansell, R., 2001, "Digital Opportunities and the Missing Link for Developing Countries", Oxford Review of Economic Policy, 17, 282-295.
McKinsey Global Institute, 2003, “Offshoring: Is it a Win-Win Game?” San Francisco: MGI.
NASSCOM, 2002, "Software and Service Industry Performance", Annual Industry Survey, 2001-02, July 18, available at www.nasscom.org.
Pissarides, C.A., 1990, Equilibrium Unemployment Theory, Cambridge, M.A.: Basil Blackwell.
Rajghatta, C., 2004, “US Makes a Mountain out of a BPO Molehill”, Times of India, Mumbai Edition, January 18.
Rama, M., 2003, Globalization and the Labour Market, The World Bank Research Observer, 18, 2, 159-186.
Shapiro, C., and H.R. Varian, 1999, Information Rules: A Strategic Guide to the Network Economy, Boston, MA: Harvard Business School Press.