Offshoreability and wages. Evidence from German task data

We analyse the relationship between individuals’ wages and the potential relocation of their jobs, which we measure as a combination of a large number of job characteristics. Going beyond existing research, we distinguish between characteristics that are theoretically supposed to make a job more offshoreable, i.e. transferable across national borders, and characteristics that are assumed to make a job more easily outsourceable, i.e. transferable across a firm’s boundary. We find that wages are largely negatively influenced by these characteristics and that they are significantly lower especially for individuals with easily offshoreable jobs. Further differentiating these results, we also find differences between blue-collar and white-collar workers and between offshoreability in manufacturing and services. Methodologically, we show that a data-generated index can approximate an individual’s job’s offshoreability without the curse of dimensionality. Copyright Associazione Amici di Economia e Politica Industriale 2015