Working Paper: NBER ID: w23067
Authors: Robert C. Feenstra
Abstract: We identify “first generation” statistics to measure offshoring as the share of imported intermediate inputs in costs, along with O*NET data to measure the tradability of tasks. These data were used to measure the shifts in relative labor demand and relative wages due to offshoring. A limitation of these statistics is that they cannot be used to measure the impact on real wages, and for that purpose, we need price-based measures of offshoring. More recently, “second generation” statistics have arisen from global input-output tables. These measures include the foreign value-added in exports, or its counterpart, the domestic value-added in exports. We illustrate the foreign value-added component in the surge of Chinese exports following its WTO entry in 2001. We argue that such second-generation statistics should also be supplemented by price-based measure of offshoring, and we propose one simple measure that extends the effective rate of protection on imports to apply to exported goods.
Keywords: offshoring; labor demand; wage inequality; globalization; value-added
JEL Codes: F12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| offshoring (F23) | relative demand for high-skilled labor (J24) |
| offshoring (F23) | relative wage of skilled workers (J31) |
| offshoring of service activities (L86) | wage gap between skilled and unskilled workers (J31) |
| increase in foreign value-added in exports (F10) | implications for domestic labor markets (F66) |