Philip M. Richter from Technische Universitat Dresden will present his paper entitled "Offshoring and Environmental Policy: Firm Selection and Distributional Effects" on Wednesday, 20th of April. The seminar will take place at online and can be joined through the following link:
Title and abstract of the paper:
Offshoring and Environmental Policy: Firm Selection and Distributional Effects
In this paper, we analyze the impacts of a unilateral environmental policy reform on emissions and income distribution in the context of offshoring. To this end, we set up a general equilibrium model of offshoring with heterogeneous firms. Each individual firm can allocate labor to different production tasks and to the abatement of emissions. Moreover, each firm can decide whether to offshore an emissions-intensive part of the production in order to benefit from lower labor and/or emissions costs abroad. We focus on policy-induced effects on occupation choices, firm selection, emissions (on the firm-level and in aggregate) as well as on income inequality. We identify as key drivers i) the marginal cost savings factor of offshoring as well as ii) across-country wedges in effective emission tax rates – both based on international differentials in exogenous emission prices and endogenous labor cost. We use the model framework to analyse the introduction of a border carbon adjustment.