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Services Offshoring and Wages: Evidence from Micro Data

  • Geishecker, Ingo


    (University of Göttingen)

  • Görg, Holger


    (Kiel Institute for the World Economy)

This paper investigates the effects of services offshoring on wages using individual level data combined with industry information on offshoring. Our results show that services offshoring affects the real wage of low and medium skilled individuals negatively. By contrast, skilled workers benefit from services offshoring in terms of higher real wages. Hence, offshoring has contributed to a widening of the wage gap between skilled and less skilled workers. This result is obtained while controlling for individual and sectoral observed and unobserved heterogeneity. In particular, our empirical model also controls for the impact of technological change and offshoring of materials.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3593.

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Length: 17 pages
Date of creation: Jul 2008
Date of revision:
Publication status: published in: Oxford Economic Papers, 2013, 65 (1), 124-146
Handle: RePEc:iza:izadps:dp3593
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  1. Alex Hijzen & Mauro Pisu & Richard Upward & Peter Wright, . "Employment, Job Turnover and the Trade in Producer Services: Firm-level Evidence," Discussion Papers 07/37, University of Nottingham, GEP.
  2. Geishecker, Ingo & Görg, Holger, 2007. "Winners and losers: A Micro-level Analysis of International Outsourcing and Wages," CEPR Discussion Papers 6484, C.E.P.R. Discussion Papers.
  3. Alexander Hijzen & Holger Görg & Robert C. Hine, 2004. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Discussion Papers of DIW Berlin 437, DIW Berlin, German Institute for Economic Research.
  4. Munch, Jakob Roland & Skaksen, Jan Rose, 2006. "Specialization, Outsourcing and Wages," Working Papers 19-2005, Copenhagen Business School, Department of Economics.
  5. Baumgarten, Daniel & Geishecker, Ingo & Görg, Holger, 2013. "Offshoring, tasks, and the skill-wage pattern," Munich Reprints in Economics 20143, University of Munich, Department of Economics.
  6. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," Boston College Working Papers in Economics 667, Boston College Department of Economics, revised 05 Sep 2007.
  7. Mary Amiti & Shang-Jin Wei, 2004. "Fear of Service Outsourcing: Is It Justified?," IMF Working Papers 04/186, International Monetary Fund.
  8. 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.
  9. Bartel, Ann P. & Lach, Saul & Sicherman, Nachum, 2009. "Outsourcing and Technological Change," IZA Discussion Papers 4678, Institute for the Study of Labor (IZA).
  10. Geishecker, Ingo, 2008. "The impact of international outsourcing on individual employment security: A micro-level analysis," Labour Economics, Elsevier, vol. 15(3), pages 291-314, June.
  11. repec:oup:qjecon:v:114:y:1999:i:3:p:907-940 is not listed on IDEAS
  12. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," North American Stata Users' Group Meetings 2003 05, Stata Users Group.
  13. Amiti, Mary & Wei, Shang-Jin, 2006. "Service Offshoring, Productivity and Employment: Evidence from the US," CEPR Discussion Papers 5475, C.E.P.R. Discussion Papers.
  14. Alexander Hijzen, 2007. "International Outsourcing, Technological Change, and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 188-205, 02.
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