The effect of outsourcing on U.S. wages and emplyment

Labor outsourcing by U.S. firms tends to reduce U.S. wages and employment because the increasing number of labors would weaken the competition in the labor market. Whenever foreign firms engage in labor outsourcing in the U.S., however, U.S. wages and employment tend to increase. Thus, these effects of wages and unemployment are ambiguous in the short-term. On the other hand, in the long-term, the effects on wages and unemployment would be much clear compared to the short-term. It is due to the fact that outsourcing amounts to another way for residents of different nations to conduct trade with one another. To be specific, specialization and trade of labor services through outsourcing would bring out overall gains from trade for participating nations