Title: Trade, offshoring, and the invisible handshake
Description: "We study the effect of globalization on the volatility of wages and worker welfare in a model in which risk is allocated through long-run employment relationships (the 'invisible handshake').  Globalization can take two forms: International integration of commodity markets (i.e., free trade) and international integration of factor markets (i.e., offshoring).  In a two-country, two-good, two-factor model we show that free trade and offshoring have opposite effects on rich-country workers.  Free trade hurts rich-country workers, while reducing the volatility of their wages; by contrast, offshoring benefits them, while raising the volatility of their wages.  We thus formalize, but also sharply circumscribe, a common critique of globalization"--National Bureau of Economic Research web site.