The story demonstrates some of the weaknesses in Blinder's contention that an employment apocalypse approaches. On the one hand, pure price competition can't continue for long; rising demand for services in the primary destinations for offshoring companies has lead to rapid wage convergence. This has combined with dollar depreciation to erode the cost advantages available to firms moving jobs overseas. On the other hand, growth in the size and sophistication of back-office nations like India has begun to create economic opportunities for American companies and workers. America can't, after all, have a comparative disadvantage in everything.

But the American workers who benefit from growth in India and Eastern Europe may not be the exact workers who lose jobs to back office enterprises abroad, and as long as transition costs for some exist, there will be political traction available to those willing to sell the notion of an offshoring menace. So much the better, then, if new data on the scope and scale of the offshoring phenomenon provides a little perspective on what exactly might be lost, or gained. [More]

Labels: economics, international, trade