Offshoring and the Skill Structure of Labour Demand


Gaaitzen De Vries, Neil Foster-McGregor and Robert Stehrer

wiiw Working Paper No. 86, June 2012
22 pages including 8 Tables and 4 Figures

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In this paper we examine the link between international outsourcing – or offshoring – and the skill structure of labour demand for a sample of 40 countries over the period 1995 2009. The paper uses data from the recently compiled World-Input-Output-Database (WIOD) to estimate a system of variable factor demand equations. These data allow us to exploit both a cross-country and cross-industry dimension and split employment into three skill categories. Our results indicate that while offshoring has impacted negatively upon all skill levels, the largest impacts have been observed for medium-skilled (and to a lesser extent high-skilled) workers. Such results are consistent with recent evidence indicating that medium-skilled workers have suffered to a greater extent than other skill types in recent years.


Keywords: offshoring, trade, wages, labour demand

JEL classification: F14, J31

Countries covered: non specific

Research Areas: International Trade, Competitiveness and FDI