When Canadian firms outsource accounting services to the United States, in markets for the labor of accountants,

Question

Quizplus · Accepted Answer

When Canadian firms outsource accounting services to the United States, this increases the demand for accountants in the United States and decreases the demand for accountants in Canada. As a result, the equilibrium employment and the market clearing wage rate will both decrease in Canada, but they will both increase in the United States. This is because the decrease in demand for accountants in Canada will lower the wage rate for accountants, while the increase in demand for accountants in the United States will raise the wage rate for accountants.

When Canadian Firms Outsource Accounting Services to the United States