Citation:
[Journal:] Economic Inquiry [ISSN:] 1465-7295 [Volume:] 58 [Issue:] 1 [Publisher:] Wiley Periodicals, Inc. [Place:] Boston, USA [Year:] 2019 [Pages:] 260-282
Publisher:
Wiley Periodicals, Inc., Boston, USA
Abstract:
In the past decades, the importance of different capital goods has gradually changed, which has led to a structural shift in the composition of the demand for capital at the expense of more traditional capital inputs such as machinery and equipment. In this paper, we focus on a novel driver of this development by analyzing the effect of offshoring on the demand for capital by asset class using a rich country-sector panel dataset. Estimating a system of factor demand equations, we document that offshoring reduces the relative demand for non-ICT capital, thereby polarizing the demand for capital. (JEL F14, F62, E22)