The Direct and Indirect Effect of Services Offshoring on Local Labour Market Outcomes

Services trade and labor market outcomes: Evidence from Italian firms

“…Overall, this body of research identifies theoretical linkages from services trade to employment and shows their existence in a number of empirical settings including firm‐ or worker‐level country case studies (see Lassmann, 2020, for a recent synthesis paper on this particular level of analysis), cross‐country frameworks with sector‐level data as well as local market analyses (see for instance Magli, 2020. Services imports or offshoring is found to have a positive impact on employment levels in many but not all of these settings, reflecting the opposite signs of the “scale” and the “substitution effect” identified by the theory.…”

Outsource to India: The impact of service outsourcing to India on the labor market in the United States

“…Ariu et al (2019) also find skill-biased employment change; service offshoring reduces low-skilled but increases high-skilled employment in Finland. On the other hand, Eppinger (2019) and Magli (2020) show service offshoring rather increases the total employment at the firm and community level by improving productivity in Germany and the United Kingdom, respectively. Most similarly, Driffield et al (2019) present that an increase in service offshoring of European multinational enterprises decreases employment at home before the Great Recession but increases afterward, consistent with my paper, because labor hoarding had occurred during the crisis.…”

“…Since the mid-2000s, the Indian service export to the United States (and other countries) has grown exponentially, becoming the most popular service offshoring destination. The substantial growth in service export from India stemmed from the advance of high-speed Internet and technological change in the early 2000s (Choi, 2010;Freund & Weinhold, 2002) as well as the country's massive effort to promote the business process outsourcing (BPO) sector, not from the increasing demand for service imports in the importing countries (Magli, 2020). I exploit this to estimate the causal effect of service offshoring to India on the US labor market, by following Autor et al (2013a) and instrumenting for the service trade from India to the United States utilizing India's export to the 15 European Union (EU) countries, a popular empirical strategy used in Ariu et al (2019), Eppinger (2019), Hummels et al (2014), andMagli (2020).…”

“…Since the mid‐2000s, the Indian service export to the United States (and other countries) has grown exponentially, becoming the most popular service offshoring destination. The substantial growth in service export from India stemmed from the advance of high‐speed Internet and technological change in the early 2000s (Choi, 2010; Freund & Weinhold, 2002) as well as the country's massive effort to promote the business process outsourcing (BPO) sector, not from the increasing demand for service imports in the importing countries (Magli, 2020). I exploit this to estimate the causal effect of service offshoring to India on the US labor market, by following Autor et al.…”

“…(2019) also find skill‐biased employment change; service offshoring reduces low‐skilled but increases high‐skilled employment in Finland. On the other hand, Eppinger (2019) and Magli (2020) show service offshoring rather increases the total employment at the firm and community level by improving productivity in Germany and the United Kingdom, respectively. Most similarly, Driffield et al.…”