Offshoring and the skill structure of labour demand

Abstract

In this paper we examine the link between international outsourcing -or offshoring -and the skill structure of labour demand for a sample of 40 countries over the period 1995-2009. The paper uses data from the recently compiled World-Input-Output-Database (WIOD) to estimate a system of variable factor demand equations. These data allow us to exploit both a cross-country and cross-industry dimension and split employment into three skill categories. Our results indicate that while offshoring has impacted negatively upon all skill levels, the largest impacts have been observed for medium-skilled (and to a lesser extent high-skilled) workers. Such results are consistent with recent evidence indicating that medium-skilled workers have suffered to a greater extent than other skill types in recent years.

Global Value Chains: A Survey of Drivers and Measures

“…Foster‐McGregor et al . () study the link between offshoring and skill composition, finding the largest negative effects of offshoring for medium‐skilled workers. Timmer et al .…”

How Offshoring Can Affect the Industries’ Skill Composition

“…Both offshoring scenarios in the relative high-skill intensive X industry (if the X industry imports its low-skill intensive intermediates L or its high-skill intensive counterparts H) have a statistical significant positive effect on the industries high-skill labor ratio. The effect of both offshoring scenarios in the low-skill intensive industries is negative, statistically significant with the system GMM estimation considering offshoring of high-skill intensive production parts H. 15 It is worthwhile to explain the increase in the sample-size to 330 observations and 40 groups when conducting the analysis at the more disaggregated level. The increase occurs by differentiating between two different parts of the production structure.…”

“…The effects also show a positive tendency (even when being slightly outside the common level of reported statistical significance) if the industries relocate their low-skill intensive parts of production (i VS X → L). 15 …”

“…Most of the economic literature that investigates labor-market effects of offshoring keeps the focus on the effects on relative wages (see e.g., Berman et [7][8][9][10][11][12][13][14][15]). It is important to note that offshoring, as shown by Blinder (2009), is not only putting low-skilled labor under pressure [16].…”

Towards Life Cycle Sustainability Assessment of Alternative Passenger Vehicles

“…Disaggregated income allocations based on skill-levels also show the skill structure of labor demand for each vehicle type, which should be considered when developing policies since the skill-structure of the labor and market needs must match in order to implement these policies effectively [107]. Considering that globalization increased the offshoring of production, unskilled labor-intensive stages of production are likely to shift to developing countries that have more low-skilled workers, while more technologically advanced stages remain in skilled labor-abundant developed countries [108]. Although electric vehicles increase the import in Scenario 2, at the same time, they generate income for low and medium-skilled workers in the U.S.…”