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The Effects Of Offshoring To Low-Wage Countries On Domestic Wages – A Worldwide Industrial Analysis

Author

Listed:
  • Joanna Wolszczak-Derlacz

    (Gdansk University of Technology, Gdansk, Poland)

  • Aleksandra Parteka

    (Gdansk University of Technology, Gdansk, Poland)

Abstract

This paper extends the literature on the implications of offshoring for labour markets by investigating its effect on the wages of different skill groups in a broad global context. The analysis draws on input-output data from the WIOD project, and in the panel analysed (13 manufacturing industries, 40 countries, 1995 – 2009) we capture up to 96% of the international trade in manufacturing inputs. Being particularly interested in the wage effects of offshoring to low wage countries (LWC), we employ precise LWC classifications (varying across industries and time) to decompose overall offshoring by source country. We employ a decomposition of the conventional offshoring measure in order to capture its pure international component, which is further instrumented using a gravity-based strategy. According to the estimation results, the negative impact of offshoring on wages mainly concerns low and medium skilled workers. However, in terms of magnitude, the downward pressure on domestic wages exhibited by offshoring to LWC is relatively small. LWC (Low wage countries) classifications employed in this paper are downloadable at: http://zie.pg.edu.pl/aparteka/publications [file LowWageCountries_classifications_WolszczakDerlacz_Parteka].

Suggested Citation

  • Joanna Wolszczak-Derlacz & Aleksandra Parteka, 2016. "The Effects Of Offshoring To Low-Wage Countries On Domestic Wages – A Worldwide Industrial Analysis," GUT FME Working Paper Series A 36, Faculty of Management and Economics, Gdansk University of Technology.
    • Handle: RePEc:gdk:wpaper:36
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    Cited by:

    1. Aleksandra Parteka & Sabina Szymczak & Joanna Wolszczak-Derlacz, 2017. "Gender Wage Gap Convergence and Skills Heterogeneity in Poland (2005–2014) – Quantile Regression Analysis Based on Microdata from EU SILC," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 47, pages 129-142.

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    More about this item

    Keywords

    wage; offshoring; input-output; low-wage countries;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models

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