American Economic Review: Vol. 104 No. 6 (June 2014)

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The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data

Article Citation

Hummels, David, Rasmus Jørgensen, Jakob Munch, and Chong Xiang. 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data." American Economic Review, 104(6): 1597-1629.

DOI: 10.1257/aer.104.6.1597

Abstract

We employ data that match the population of Danish workers to the universe of private-sector Danish firms, with product-level trade flows by origin- and destination-countries. We document new stylized facts about offshoring and instrument for offshoring and exporting. Within job spells, offshoring increases (decreases) the high-skilled (low-skilled) wage; exporting increases the wages of all skill-types; the net wage-effect of trade varies substantially within the same skill-type; conditional on skill, the wage-effect of offshoring varies across task characteristics. We estimate the overall effects of offshoring on workers' present and future income streams by constructing pre-offshoring-shock worker-cohorts and tracking them over time.

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Additional Materials

Online Appendix (252.96 KB) | Download Data Set (166.34 KB) | Author Disclosure Statement(s) (126.26 KB)

Authors

Hummels, David (Purdue U)
Jørgensen, Rasmus (U Copenhagen)
Munch, Jakob (U Copenhagen)
Xiang, Chong (Purdue U)

JEL Classifications

F14: Empirical Studies of Trade
F16: Trade and Labor Market Interactions
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J31: Wage Level and Structure; Wage Differentials
L24: Contracting Out; Joint Ventures; Technology Licensing


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