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Service offshoring and wages: worker-level evidence from Italy

We study the effects of service offshoring on the wages of Italian workers. To this purpose, we build up a novel data set combining information from two different sources: (1) matched employer-employee data based on administrative records from the Italian National Social Security Institute; and (2) industry-level indicators of service offshoring based on Import Matrices released by the Italian Statistical Office. We estimate worker-level wage regressions controlling for a number of employee, firm and industry characteristics. In line with previous studies, we find that service offshoring does not cause significant reductions in workers’ wages. We also find, however, that service offshoring contributes to widening the wage gap between more and less skilled employees. Finally, we document heterogeneity in the effects of service offshoring depending on the type of activities relocated abroad. Specifically, our results show that offshoring of business services exerts moderately negative effects on workers’ wages, whereas offshoring of other services has virtually no impact on individual earnings.

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Paper provided by Cattaneo University (LIUC) in its series LIUC Papers in Economics with number 264.

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Length: 28 pages
Date of creation: Apr 2013
Date of revision:
Publication status: Published in LIUC papers, no.264, 2013 - Economia e Impresa 69
Handle: RePEc:liu:liucec:264
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  1. Crinò, Rosario, 2010. "Employment effects of service offshoring: Evidence from matched firms," Economics Letters, Elsevier, vol. 107(2), pages 253-256, May.
  2. Pol Antràs & Luis Garicano & Esteban Rossi-Hansberg, 2005. "Offshoring in a Knowledge Economy," NBER Working Papers 11094, National Bureau of Economic Research, Inc.
  3. Head, Keith & Mayer, Thierry & Ries, John, 2007. "How Remote is the Offshoring Threat?," CEPR Discussion Papers 6542, C.E.P.R. Discussion Papers.
  4. Jagdish Bhagwati & Arvind Panagariya & T. N. Srinivasan, 2004. "The Muddles over Outsourcing," International Trade 0408004, EconWPA.
  5. 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.
  6. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc.
  7. Helpman, Elhanan, 2006. "Trade, FDI and the Organization of Firms," CEPR Discussion Papers 5589, C.E.P.R. Discussion Papers.
  8. repec:hrv:faseco:4784031 is not listed on IDEAS
  9. 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, MIT Press, vol. 114(3), pages 907-940, August.
  10. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc.
  11. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
  12. Anna M. Falzoni & Lucia Tajoli, 2008. "Offshoring and the skill composition of employment in the Italian manufacturing industries," KITeS Working Papers 219, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2008.
  13. Rosario Crin�, 2009. "Offshoring, Multinationals And Labour Market: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 197-249, 04.
  14. Rosario Crin�, 2010. "Service Offshoring and White-Collar Employment," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 595-632.
  15. Peter D. Ørberg Jensen & Jacob Funk Kirkegaard & Nicolai Søndergaard Laugesen, 2006. "Offshoring in Europe—Evidence of a Two-Way Street from Denmark," Working Paper Series WP06-3, Peterson Institute for International Economics.
  16. Oecd, 2005. "Potential Offshoring of ICT-intensive Using Occupations," OECD Digital Economy Papers 91, OECD Publishing.
  17. Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
  18. 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.
  19. James Markusen & Bridget Strand, 2008. "Offshoring of Business Services in Small Open Economies: Toward a General-Equilibrium Modeling Approach," Journal of Industry, Competition and Trade, Springer, vol. 8(3), pages 231-246, December.
  20. Anna Maria Falzoni & Alessandra Venturini & Claudia Villosio, 2011. "Skilled and unskilled wage dynamics in Italy in the 1990s: changes in individual characteristics, institutions, trade and technology," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(4), pages 441-463.
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