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Wage effects of U.S. service offshoring by skills and tasks

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  • Julia Püschel
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    Abstract

    In this paper, I estimate the impact of service offshoring on the real wages of U.S. workers by controlling for workers’ skill levels and the offshoring susceptibility of different tasks. Matching individual-level wage data with input-output tables over the period from 2006 to 2009, I am further able to account for unobservable individual-level heterogeneity. The results from a Mincerian wage regression indicate that within skill groups, the impact of service offshoring on real wages depends on the task content of the respective occupation. The real wages of medium- and high-skilled workers employed in the least offshorable occupations were positively affected by service offshoring. However, within the groups of medium- and high-skilled workers, service offshoring negatively affected the real wage of the most tradable occupations.

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    Bibliographic Info

    Paper provided by FIW in its series FIW Working Paper series with number 107.

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    Length: 30
    Date of creation: Mar 2013
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    Handle: RePEc:wsr:wpaper:y:2013:i:107

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    Postal: FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
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    Keywords: Offshoring; services; tasks; wages;

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    1. Runjuan Liu & Daniel Trefler, 2008. "Much Ado About Nothing: American Jobs and the Rise of Service Outsourcing to China and India," NBER Working Papers 14061, National Bureau of Economic Research, Inc.
    2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/generalized method of moments estimation and testing," Stata Journal, StataCorp LP, vol. 7(4), pages 465-506, December.
    3. Daniel Baumgarten & Ingo Geishecker & Holger Görg, 2010. "Offshoring, tasks, and the skill-wage pattern," Kiel Working Papers 1603, Kiel Institute for the World Economy.
    4. Ebenstein, Avraham & Harrison, Ann & McMillan, Margaret & Phillips, Shannon, 2011. "Estimating the impact of trade and offshoring on American workers using the current population surveys," Policy Research Working Paper Series 5750, The World Bank.
    5. Bardhan, Ashok Deo & Kroll, Cynthia, 2003. "The New Wave of Outsourcing," Fisher Center for Real Estate & Urban Economics, Research Reports qt02f8z392, Fisher Center for Real Estate & Urban Economics, UC Berkeley.
    6. Gueorgui Kambourov & Iourii Manovskii, 2009. "Occupational Mobility and Wage Inequality," Review of Economic Studies, Oxford University Press, vol. 76(2), pages 731-759.
    7. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-97, December.
    8. Margit Molnár & Nigel Pain & Daria Taglioni, 2007. "The Internationalisation of Production, International Outsourcing and Employment in the OECD," OECD Economics Department Working Papers 561, OECD Publishing.
    9. 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, vol. 114(3), pages 907-940, August.
    10. Ingo Geishecker & Holger Görg, 2008. "Winners and losers: a micro-level analysis of international outsourcing and wages," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 243-270, February.
    11. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
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