Global outsourcing has cost the U.S. economy far more than one million jobs sinc

Question

Global outsourcing has cost the U.S. economy far more than one million jobs since 2001, or somewhere between 15 and 35 percent of the total decline in employment since the onset of the 2001 recession.

a. How does outsourcing affect the bargaining power of U.S. workers and the bargaining power of U.S. employers?

b. What will it likely do to the overall level of U.S. workers' wages?

c. What will it likely do to lawyers' wages?

d. If you stated that it affected lawyers' wages differently, do you believe that the U.S. policy response to outsourcing would be different?

e. Do you believe the companies' outsourcing policy supports theory of comparative advantage?

Explanation / Answer

Ans:

a.

Outsourcing: This is the process of executing works from abroad suppliers.

Outsourcing increases the scope of bargaining of employers and reduces the scope of bargaining of employees. Since the US-employers have several alternatives of doing works from outside, they might not get interest about US-employees if their rates are high. On the other hand, US-employees may not able to bargain for higher rates, since US-employers already have several alternatives.

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