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The effects of offshoring to low-wage countries on domestic wages: a worldwide industrial analysis

Abstract

This paper extends the literature on the implications of offshoring for labour markets by investigating its effect on the wages of different skill groups in a broad global context. The analysis draws on input–output data from the WIOD project, and in the panel analysed (13 manufacturing industries, 40 countries, 1995–2009) we account for up to 96 % of the international trade in manufacturing inputs. Being particularly interested in the wage effects of offshoring to low-wage countries (LWC), we use precise LWC classifications (varying across industries and time) to decompose overall offshoring by source country. We use a decomposition of the conventional offshoring measure in order to capture its pure international component, which is further instrumented using a gravity-based strategy. According to the estimation results, the negative impact of offshoring on wages mainly concerns low and medium skilled workers. However, in terms of magnitude, the downward pressure on domestic wages exhibited by offshoring to LWC is relatively small.

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Details

Category:
Articles
Type:
artykuł w czasopiśmie wyróżnionym w JCR
Published in:
Empirica no. 45, pages 129 - 163,
ISSN: 0340-8744
Language:
English
Publication year:
2018
Bibliographic description:
Wolszczak-Derlacz J., Parteka A.: The effects of offshoring to low-wage countries on domestic wages: a worldwide industrial analysis// Empirica. -Vol. 45, nr. 1 (2018), s.129-163
DOI:
Digital Object Identifier (open in new tab) 10.1007/s10663-016-9352-4
Verified by:
Gdańsk University of Technology

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