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Trade, tasks, and training: The effect of offshoring on individual skill upgrading

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  • Hogrefe, Jan
  • Wrona, Jens

Abstract

We offer a theoretical explanation and empirical evidence for a positive link between increased offshoring and individual skill upgrading. Skill upgrading takes the form of on-the-job training, complementing the existing literature, which mainly focuses on the retraining of workers after a direct job displacement through offshoring. To establish a link between offshoring and on-the-job training, we introduce an individual skill upgrading margin into the small-open-economy version of the Grossman and Rossi-Hansberg (2008) model of offshoring. In our model offshoring, by scaling up workers' wages, creates previously unexploited skill upgrading possibilities and, thus, leads to more on-the-job training. Using data from German manufacturing, we find strong empirical support for the prediction that increased offshoring is positively related to individual on-the-job training participation. --

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Bibliographic Info

Paper provided by University of Tuebingen, Faculty of Economics and Social Sciences in its series University of Tuebingen Working Papers in Economics and Finance with number 64.

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Date of creation: 2013
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Handle: RePEc:zbw:tuewef:64

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Keywords: Offshoring; Tasks; Skill upgrading; On-the-job training;

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