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The impact of production offshoring on the skill composition of manufacturing firms: evidence from Italy

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  • Roberto Antonietti
  • Davide Antonioli

Abstract

In this work we explore how the international outsourcing of production impacts the skill composition of employment within Italian manufacturing firms. In particular, our aim is to assess whether the choice to offshore production activities to cheap-labour countries implies a bias in the employment of skilled workers relative to unskilled ones. Using a balanced panel of firms covering the period 1995-2003, we set up a counterfactual analysis in which, by using a difference-in-differences propensity score matching estimator, we compare the dynamics of skill demand for treated and control firms while addressing the possible problem of selection bias. Our results identify a 'potential' skill bias effect of production offshoring. In particular, we find that treated firms tend to show an upward shift in the skill ratio with respect to the counterfactual sample, but coefficients are not significantly different from zero. When we look at the elements of the skill ratio separately, we find that the skill bias is driven by a fall in the employment of production workers (blue collars), rather than by the increase in the employment of non-production workers (white collars), thus providing further evidence on the unskilled labour-saving nature of international outsourcing.

Suggested Citation

  • Roberto Antonietti & Davide Antonioli, 2011. "The impact of production offshoring on the skill composition of manufacturing firms: evidence from Italy," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 87-105.
  • Handle: RePEc:taf:irapec:v:25:y:2011:i:1:p:87-105
    DOI: 10.1080/02692171.2010.483461
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    References listed on IDEAS

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    1. Anna M. Falzoni & Lucia Tajoli, 2011. "Offshoring and the Skill Composition of Employment in the Italian Manufacturing Industries," Rivista di Politica Economica, SIPI Spa, issue 1, pages 121-153, January-M.
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    Cited by:

    1. Amador, João & Cabral, Sónia, 2014. "Global value chains: surveying drivers and measures," Working Paper Series 1739, European Central Bank.
    2. Timo Mitze & Björn Alecke & Janina Reinkowski & Gerhard Untiedt, 2015. "Linking collaborative R&D strategies with the research and innovation performance of SMEs in peripheral regions: Do spatial and organizational choices make a difference?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 555-596, December.
    3. Nathalie Chusseau & Joël Hellier, 2012. "Globalisation and Inequality: Where do we stand?," Journal of Income Distribution, Journal of Income Distribution, vol. 21(3-4), pages 7-34, November.
    4. Antonioli, Davide & Manzalini, Rocco & Pini, Paolo, 2011. "Innovation, workers skills and industrial relations: Empirical evidence from firm-level Italian data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 312-326, May.
    5. Anna M. Falzoni & Lucia Tajoli, 2011. "Offshoring and the Skill Composition of Employment in the Italian Manufacturing Industries," Rivista di Politica Economica, SIPI Spa, issue 1, pages 121-153, January-M.
    6. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    7. Warda, Peter, 2014. "Offshoring, Occupations and Job Tasks: Evidence from Swedish Manufacturing," Working Paper Series in Economics and Institutions of Innovation 375, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    8. Nathalie Chusseau & Michel Dumont, 2012. "Growing Income Inequalities in Advanced," Working Papers hal-00993359, HAL.

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