Offshoring and the skill structure of labour demand
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In this paper we examine the link between international outsourcing—or offshoring—and the skill structure of labour demand for a sample of 40 countries over the period 1995–2009. The paper uses data from the recently compiled World Input–Output Database to estimate a system of variable factor demand equations. These data allow us to exploit both a cross-country and cross-industry dimension and split employment into three skill categories. Our results indicate that while offshoring has impacted negatively upon all skill levels within industries, the largest impacts have been observed for medium-skilled workers. Such results are consistent with recent evidence indicating that medium-skilled workers have suffered to a greater extent than other skill types in recent years.
KeywordsOffshoring Trade Wages Labour demand
JEL ClassificationF14 J31
This paper is part of the World Input–Output Database (WIOD) project funded by the European Commission, Research Directorate General as part of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities, grant Agreement no: 225 281. More information on the WIOD project can be found at www.wiod.org. Foster-McGregor and Stehrer acknowledge funding from the Jubiläumsfonds of the Austrian National Bank (OeNB), grant number 14455. The authors would like to thank the referees for earlier comments on this paper as well as participants in the final WIOD conference in Groningen. All remaining errors are our own.
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