Offshoring, tasks, and the skill-wage pattern

• Published in: European economic review Vol. 61; pp. 132 - 152
• Main Authors: Baumgarten, Daniel, Geishecker, Ingo, Görg, Holger
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01-07-2013; Elsevier Sequoia S.A
• Subjects: Economic theory; Labor economics; Labour mobility; Occupations; Offshoring; Outsourcing; Semi-skilled workers; Skills; Studies; Subcontracting; Tasks; Wage rates; Wages; Wages & salaries; Tasks; Skills; Offshoring; J3; F1; Outsourcing; F2; Wages
• ISSN: 0014-2921; 1873-572X
• DOI: 10.1016/j.euroecorev.2013.03.007

The paper investigates the relationship between offshoring, wages, and the occupational task profile using rich individual-level panel data. Our main results suggest that, when only considering within-industry changes in offshoring, we identify a moderate wage reduction due to offshoring for low-skilled workers, though wage effects in relation to the task profile of occupations are not estimated with sufficient precision. However, when allowing for cross-industry effects of offshoring, i.e. allowing for labor mobility across industries, negative wage effects of offshoring are quite substantial and depend strongly on the task profile of workers' occupations. A higher degree of interactivity and, in particular, non-routine content effectively shields workers against the negative wage impact of offshoring.
• We investigate the relationship between offshoring, wages, and the nature of occu-pational tasks.• Within skill groups, the wage effects of offsshoring depend on the job's degree of interactivity and non-routine content.• Within-industry changes in offsshoring have modest wage effects.• However, wage effects become substantial if cross-industry spillovers are allowed for.