We measure the impact of China's decision to open its economy in 1980 on outsourcing from Hong Kong and the relative demand for less-skilled workers. We show that the relative demand for skilled workers in Hong Kong increased at the same time outsourcing to China began to increase. The reallocation of workers from manufacturing to "outsourcing services" can account for 15 percent, and increased utilization of skilled workers within manufacturing industries for 30 percent, of the aggregate relative demand shift. In addition, the rate of skill upgrading has been greater in manufacturing industries that have seen a greater degree of outsourcing to China.
Hsieh, Chang-Tai, and Keong T. Woo.
2005."The Impact of Outsourcing to China on Hong Kong's Labor Market."American Economic Review,
95(5): 1673-1687.DOI: 10.1257/000282805775014272