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Offshoring and Occupational Wages: Some empirical evidence

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  • Bigsten, Arne

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Durevall, Dick

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Munshi, Farzana

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

Offshoring has changed the pattern of international competition; labor in specific occupations rather than whole firms and sectors are now facing competition. Accordingly, wages in offshorable occupations are affected in new ways. In this paper we investigate the effects of offshoring of electronically traded services on relative occupational wages in 13 countries in the 1990-2003 period. Our findings show that increased exports of IT-related services lead to higher relative wages in offshorable occupations, whereas increased imports of such service reduce them. There is also some evidence that the impact of offshoring on relative wages is larger the lower the level GDP per capita.

Suggested Citation

  • Bigsten, Arne & Durevall, Dick & Munshi, Farzana, 2008. "Offshoring and Occupational Wages: Some empirical evidence," Working Papers in Economics 312, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0312
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    File URL: http://hdl.handle.net/2077/10640
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    References listed on IDEAS

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    1. 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, Oxford University Press, vol. 114(3), pages 907-940.
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    3. Alexander Hijzen, 2007. "International Outsourcing, Technological Change, and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 188-205, February.
    4. Deardorff, Alan V., 2001. "Fragmentation in simple trade models," The North American Journal of Economics and Finance, Elsevier, vol. 12(2), pages 121-137, July.
    5. Mary Amiti & Shang-Jin Wei, 2005. "Fear of service outsourcing: is it justified?," Economic Policy, CEPR;CES;MSH, vol. 20(42), pages 308-347, April.
    6. Ekholm, Karolina & Hakkala, Katariina, 2005. "The Effect of Offshoring on Labor Demand: Evidence from Sweden," Working Paper Series 654, Research Institute of Industrial Economics.
    7. Andrés Rodríguez-Clare, 2010. "Offshoring in a Ricardian World," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 227-258, April.
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    Cited by:

    1. Tobal Martín, 2015. "A Model of Wage and Employment Effects of Service Offshoring," Working Papers 2015-10, Banco de México.

    More about this item

    Keywords

    Offshoring; globalization; occupational wages; service trade;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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