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Services Offshoring and Wages: Evidence from Micro Data

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  • Geishecker, Ingo

    ()
    (University of Göttingen)

  • Görg, Holger

    ()
    (Kiel Institute for the World Economy)

Abstract

This paper investigates the effects of services offshoring on wages using individual level data combined with industry information on offshoring. Our results show that services offshoring affects the real wage of low and medium skilled individuals negatively. By contrast, skilled workers benefit from services offshoring in terms of higher real wages. Hence, offshoring has contributed to a widening of the wage gap between skilled and less skilled workers. This result is obtained while controlling for individual and sectoral observed and unobserved heterogeneity. In particular, our empirical model also controls for the impact of technological change and offshoring of materials.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3593.

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Length: 17 pages
Date of creation: Jul 2008
Date of revision:
Publication status: published in: Oxford Economic Papers, 2013, 65 (1), 124-146
Handle: RePEc:iza:izadps:dp3593

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Keywords: services offshoring; individual wages;

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References

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  1. Munch, Jakob R. & Skaksen, Jan Rose, 2005. "Specialization, Outsourcing and Wages," IZA Discussion Papers 1907, Institute for the Study of Labor (IZA).
  2. Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2009. "Estimating the Impact of Trade and Offshoring on American Workers Using the Current Population Surveys," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0742, Department of Economics, Tufts University.
  3. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," United Kingdom Stata Users' Group Meetings 2003, Stata Users Group 02, Stata Users Group.
  4. Hijzen, Alexander & Görg, Holger & Hine, Robert C., 2004. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," IZA Discussion Papers 1249, Institute for the Study of Labor (IZA).
  5. Alexander Hijzen, 2007. "International Outsourcing, Technological Change, and Wage Inequality," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 15(1), pages 188-205, 02.
  6. Alexander Hijzen & Mauro Pisu & Richard Upward & Peter W. Wright, 2011. "Employment, job turnover, and trade in producer services: UK firm-level evidence," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 44(3), pages 1020-1043, August.
  7. Geishecker, Ingo, 2008. "The impact of international outsourcing on individual employment security: A micro-level analysis," Labour Economics, Elsevier, Elsevier, vol. 15(3), pages 291-314, June.
  8. Mary Amiti & Shang-Jin Wei, 2004. "Fear of Service Outsourcing: Is It Justified?," NBER Working Papers 10808, National Bureau of Economic Research, Inc.
  9. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," Boston College Working Papers in Economics, Boston College Department of Economics 667, Boston College Department of Economics, revised 05 Sep 2007.
  10. Daniel Baumgarten & Ingo Geishecker & Holger Görg, 2010. "Offshoring, tasks, and the skill-wage pattern," Kiel Working Papers 1603, Kiel Institute for the World Economy.
  11. Bartel, Ann P. & Lach, Saul & Sicherman, Nachum, 2009. "Outsourcing and Technological Change," IZA Discussion Papers 4678, Institute for the Study of Labor (IZA).
  12. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact Of Outsourcing And High-Technology Capital On Wages: Estimates For The United States, 1979-1990," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(3), pages 907-940, August.
  13. Amiti, Mary & Wei, Shang-Jin, 2006. "Service Offshoring, Productivity and Employment: Evidence from the US," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5475, C.E.P.R. Discussion Papers.
  14. Ingo Geishecker & Holger Görg, 2008. "Winners and losers: a micro-level analysis of international outsourcing and wages," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 41(1), pages 243-270, February.
  15. repec:got:cegedp:98 is not listed on IDEAS
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Citations

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Cited by:
  1. Rosario Crinò, 2009. "Employment Effects of Service Offshoring: Evidence from Matched Firms," Development Working Papers, Centro Studi Luca d\'Agliano, University of Milano 286, Centro Studi Luca d\'Agliano, University of Milano.
  2. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers, Banco de Portugal, Economics and Research Department w201403, Banco de Portugal, Economics and Research Department.
  3. Éva Polgár & Julia Wörz, 2010. "No risk and some fun? Trade and wages in the enlarged European Union," Empirica, Springer, Springer, vol. 37(2), pages 127-163, May.
  4. Giuseppe Bognetti & Michele Santoni, 2010. "Can domestic unions gain from offshoring?," Journal of Economics, Springer, Springer, vol. 100(1), pages 51-67, May.
  5. Rosario Crinò, 2009. "Service Offshoring and White-Collar Employment," Working Papers 391, Barcelona Graduate School of Economics.

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