A Rationale For Evidence On Service Offshoring

Martin Tobal

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

Abstract: On the one hand, empiricists debate on which and how many labor dimensions are relevant for understanding the employment effects of the 1990's service offshoring boom. On the other hand, theorists pursue trade theory's traditional goal: to explain wage-responses to the shock. This paper rationalizes recent evidence on employment and reconciles theory with a current empirical debate. To this purpose, the article derives employment responses that are continous in occupations' off shoring costs and depend on two labor dimensions: skill-intensities and tradeability characteristics. Furthermore, the paper yields intutitive wage-respsonses and addresses theorists' traditional concern. In particular, under the assumption that knowledge is occupation-specific, the article derives wage- responses that are not fully explained by skill-levels. More precisely, service offshoring deteriorates the wage of "many" skilled workers whose tasks have relatively low offshoring costs.

Keywords: labor; wages, Social and Behavioral Sciences (search for similar items in EconPapers)
Date: 2011-09-01
New Economics Papers: this item is included in nep-int, nep-lab and nep-lma
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