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  3. American Economic Review
  4. June 2014
  5. The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data

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

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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.

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

Additional Materials

JEL Classification

  • 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