A macro-economic analysis of the effect of offshoring and rehiring on the US economy

摘要

Offshore labor outsourcing ("offshoring") is a process in which US companies set up overseas production facilities, employing local workers, simultaneously curtailing their production on US soil and laying off part of their US workforce. This is followed by (is intertwined with) rehiring a part of the laid-off workers, usually by other companies, to boost production for domestic consumption and/or export. We present a mathematical analysis of the effects of these processes, on such measures as the personal, corporate, government and foreign balances (income minus expenditures). We use an input-output model of the US economy, calibrated to data from government databases, as a reference, and investigate the effects of offshoring and rehiring by mathematical extrapolation. Various rehiring strategies are explored. The analysis is then extended to the effect of cheaper goods and services, arising from splitting the offshoring-generated savings between profit and price reduction. In the latter framework, equilibrium pricing is also investigated.