Nottingham Centre for Research on
Globalisation and Economic Policy (GEP)

GEP Research Paper 08/22

 

Services Offshoring and Wages: Evidence from Micro Data

 

Ingo Geishecker and Holger Görg

Summary

We show that services offshoring affects the real wage of low and medium skilled individuals negatively. By contrast, skilled workers benefit in terms of higher real wages. Hence, offshoring has contributed to a widening of the wage gap between skilled and less skilled workers.

 

Abstract

 

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.

 

Issued in July 2008

 

This paper is available in PDF format

 

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