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Offshoring, Outsourcing, and Production Relocation—Labor-Market Effects in the OECD Countries and Developing Asia

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  • Jacob Funk Kirkegaard

    () (Peterson Institute for International Economics)

Abstract

This working paper evaluates the validity of available data on and the extent of the impact of offshoring on service-sector labor markets in the United States, EU-15, and Japan. A three-tier data validity hierarchy is identified. The impact of offshoring on employment in the three regions is found to be limited. Correspondingly, developing Asia is unlikely to experience large employment gains as a destination region. The paper highlights the case of the Indian IT industry, where the majority of job creation has been in local Indian companies rather than foreign multinationals. Domestic entrepreneurs have played a crucial role in the growth of the Indian IT-related service industry. However, increased tradability of services and associated skill bias in favor of higher skilled workers could have an uneven employment impact on developing Asia. Some high-skilled groups are benefiting and will continue to benefit dramatically from new employment opportunities and rising wage levels. Meanwhile, the same skill bias may eliminate many employment opportunities for unskilled or low-skilled groups in the region. Developing Asian countries therefore face a double educational challenge in the coming years: the need to simultaneously improve both primary aCreation-Date: 2006-06

Suggested Citation

  • Jacob Funk Kirkegaard, 2007. "Offshoring, Outsourcing, and Production Relocation—Labor-Market Effects in the OECD Countries and Developing Asia," Working Paper Series WP07-2, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp07-2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Nana Bourtchouladze, 2007. "Offshoring and Heterogeneous Firms: One Job Offshored, One Job Lost?," IHEID Working Papers 28-2007, Economics Section, The Graduate Institute of International Studies, revised Dec 2007.
    2. Monarch, Ryan & Park, Jooyoun & Sivadasan, Jagadeesh, 2017. "Domestic gains from offshoring? Evidence from TAA-linked U.S. microdata," Journal of International Economics, Elsevier, vol. 105(C), pages 150-173.
    3. Agnese, Pablo, 2009. "Japan and her dealings with offshoring: An empirical analysis with aggregate data," IESE Research Papers D/793, IESE Business School.
    4. Agnese, Pablo & Ricart, Joan E., 2009. "Offshoring: Facts and figures at the country level," IESE Research Papers D/792, IESE Business School.
    5. Bank for International Settlements, 2010. "Globalisation, labour markets and international adjustment - Essays in honour of Palle S Andersen," BIS Papers, Bank for International Settlements, number 50, April.
    6. Monarch, Ryan & Park, Jooyoun & Sivadasan, Jagadeesh, 2013. "Gains from Offshoring? Evidence from U.S. Microdata," Working Papers 635, Research Seminar in International Economics, University of Michigan.
    7. Suparna Karmakar, 2008. "An Open Services Regime - Recipe for Jobless Growth?," Macroeconomics Working Papers 22168, East Asian Bureau of Economic Research.
    8. repec:dau:papers:123456789/12528 is not listed on IDEAS
    9. Francisco Carballo-Cruz, 2012. "New Patterns in Global Localization: Delocalization and Relocalization of Economic Activities," Chapters,in: Globalization Trends and Regional Development, chapter 5 Edward Elgar Publishing.
    10. Elisa Borghi & Rosario Crinò, 2013. "Service offshoring and wages: worker-level evidence from Italy," LIUC Papers in Economics 264, Cattaneo University (LIUC).
    11. David T Coe, 2010. "Globalisation and labour markets: implications of the emergence of China and India," BIS Papers chapters,in: Globalisation, labour markets and international adjustment - Essays in honour of Palle S Andersen, volume 50, pages 139-157 Bank for International Settlements.

    More about this item

    Keywords

    Service Sectors; Offshoring; Production Relocation; Data Source Validity; Automation; Highly Skilled Workers;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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