DP8628 Services offshoring and wages: Evidence from micro data

Author(s): Ingo Geishecker, Holger Görg
Publication Date: November 2011
Keyword(s): individual level, services offshoring, wages
JEL(s): C23, F16, J31
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8628

This paper investigates the effects of services offshoring on wages using individual-level data combined with industry information on offshoring for the United Kingdom. Our results show that services offshoring affects the real wage of low- and medium-skilled individuals negatively. By contrast, skilled workers may 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.