The concept of happiness has been popular throughout written history. When attempting to visualize the human life of 200 or 2000 years ago, the first assumption that springs to mind is that the preconditions for thinking about happiness were lacking. The conditions of life were often cruel to the common man and most were unable to read or write. Even when more people were equipped with the necessary skills, there was not much to read apart from religious literature, primarily, the Bible. There one could find messages that would remind them of their present condition.
Offshoring, i.e. the transfer of domestic jobs to overseas plants, is often blamed for the degradation of job conditions among unskilled workers in developed countries. This paper looks at this issue in a special light by focusing on a two-skill model of production with heterogeneous firms, where workers are effectively barred from moving across sectors and skill levels. In doing so, the model mimics the lack of evidence on massive inter-sectoral reallocation of workers even during recessions. The heterogeneity of firms makes mixed offshoring, where only a fraction of firms set up overseas operation, a feasible and important outcome when trade opens.
There’s a agreement that there exists a strong link between too much regulation, called “market frictions”, and economic under-performance. Indeed, a growing body of literature claims market frictions are to blame for the divergent performance in productivity and employment of continental European versus US economies during the 80s and 90s. But, if European markets should be deregulated, why doesn’t it happen? While product market reforms are slow-moving in Europe and some sectors are still virtually served by monopolies, labour market deregulation is even less pronounced (Gönenç et al., 2000).
