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The Effect of Offshoring on Skill Premiums: Evidence from Japanese Matched Worker-Firm Data

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  • Masahiro Endoh

    (Faculty of Business and Commerce, Keio University)

Abstract

This study estimates the effect of offshoring on workers' hourly wages and annual income in Japan by constructing matched worker-firm data. I use two sets of dummies to take into account two aspects of worker skills: field of skills and level of skills. Interestingly, the estimated scale of impact from offshoring and exports on hourly wages and annual income of male low-skilled workers is statistically insignificant in Japan. Regarding skill premiums, offshoring increases wage premium for higher level of skill as well as that for science-oriented knowledge and administrative tasks. Interestingly, exports decrease these skill premiums, meaning the increase of both offshoring and exports partially offsets their effect on skill premiums. In addition, it is observed that the uneven gendered effects of trade on hourly wage are leveled out to some degree by the adjustment of working hours and bonuses. These findings imply that the shock of international transaction in a particular firm is mitigated by its internal labor market.

Suggested Citation

  • Masahiro Endoh, 2016. "The Effect of Offshoring on Skill Premiums: Evidence from Japanese Matched Worker-Firm Data," Keio-IES Discussion Paper Series 2016-005, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:2016-005
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    References listed on IDEAS

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    Cited by:

    1. ITO Koji, 2017. "Wage Premium of Exporting Plants in Japan: Do plant and firm size matter?," Discussion papers 17115, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Offshoring; Skill premium; Matched worker-firm data; Labor demand; Japanese labor market;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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