Working Paper: NBER ID: w22041
Authors: David Hummels; Jakob R. Munch; Chong Xiang
Abstract: We survey the recent empirical literature on the effects of offshoring on wages, employment and displacement. We start with the measurement of offshoring, focusing on the use of imported inputs that could have been produced by the importing firm. We overview key theories related to offshoring and its labor market effects and survey three waves of the literature on wage effects of offshoring: those using industry data, firm data, and worker data. For each wave we highlight the identification strategies used, critically assess strengths and weaknesses, discuss connections with theory, and draw out potential policy implications of its findings. Closely related, we address a new literature that looks at the differential impact of offshoring across occupations. Finally, we survey the literature that examines how offshoring affects employment and displacement. We highlight the recent development of a novel cohort-based approach that is specifically designed to address selection with displacement and capable of identifying the overall effects of offshoring, including wage changes, displacement, and other types of transitions.
Keywords: offshoring; labor markets; wages; employment; displacement
JEL Codes: F1; F16; J23; J24; J3; L2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| offshoring (F23) | wage structures (J31) |
| offshoring (F23) | skill premium (J24) |
| offshoring (F23) | demand for skilled labor (J24) |
| offshoring (F23) | employment levels (J23) |
| offshoring (F23) | productivity within firms (D22) |
| offshoring (F23) | structural changes in labor markets (J40) |