Dr. Jones: Outsourcing creates domestic jobs (but you knew that, right?)

A nice-looking paper by Hines, Foley, and Desai shows that firms that pay more wages overseas usually pay more wages here, too. If you grow over there, you're probably growing over here, too.

How do I explain this? My preferred off-the-cuff explanation is that some firms just have better ideas than other firms. If your firm has a good idea, you can move that good idea around within the company--even across national borders--to create value. And most of the time, to create that value you need good people, who cost money. So rare, firm-specific good ideas can explain what's showing up in the data.

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Posted by Garett Jones at 11/12/2005 04:57:00 PM