Offshoring, Tasks, and the Skill-Wage Pattern

The paper investigates the relationship between offshoring, wages, and the occupational task profile using rich individual-level panel data. Our main results suggest that, when only considering within- industry changes in offshoring, we identify a moderate wage reduction due to offshoring for low-skilled workers, though wage effects in relation to the task profile of occupations are not estimated with sufficient precision. However, when allowing for cross-industry effects of offshoring, i.e. allowing for labor mobility across industries, negative wage effects of offshoring are quite substantial and depend strongly on the task profile of workers’ occupations. A higher degree of interactivity and, in particular, non-routine content effectively shields workers against the negative wage impact of offshoring.

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