[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/rif/wpaper/97.html
   My bibliography  Save this paper

The Labor-market Effects of Service Offshoring: A Synthetic Control Approach with High-dimensional Microdata

Author

Listed:
  • Kässi, Otto
Abstract
I use novel high-quality survey data on firms’ international sourcing activities combined with firm-level financial and linked employer–employee data to study the effect of services offshoring on wages and employment. To overcome the endogeneity related to reverse causality and omitted variables, I use microsynth, a variation of the synthetic control method specially developed for high-dimensional microdata. I find that offshoring firms pay higher wages for both high-skilled and low-skilled workers, and employ fewer FTE workers compared with a synthetic control, but these effects take several years to appear.

Suggested Citation

  • Kässi, Otto, 2022. "The Labor-market Effects of Service Offshoring: A Synthetic Control Approach with High-dimensional Microdata," ETLA Working Papers 97, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:wpaper:97
    as

    Download full text from publisher

    File URL: https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-97.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sari Kerr & Terhi Maczulskij & Mika Maliranta, 2020. "Within and between firm trends in job polarization: the roles of globalization and technology [The skill complementarity of broadband internet]," Journal of Economic Geography, Oxford University Press, vol. 20(4), pages 1003-1039.
    2. Manning, Stephan, 2014. "Mitigate, tolerate or relocate? Offshoring challenges, strategic imperatives and resource constraints," Journal of World Business, Elsevier, vol. 49(4), pages 522-535.
    3. Brian K. Kovak & Lindsay Oldenski & Nicholas Sly, 2021. "The Labor Market Effects of Offshoring by U.S. Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 103(2), pages 381-396, May.
    4. Kässi, Otto & Lehdonvirta, Vili, 2018. "Online labour index: Measuring the online gig economy for policy and research," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 241-248.
    5. Susan Athey & Guido W. Imbens, 2017. "The State of Applied Econometrics: Causality and Policy Evaluation," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 3-32, Spring.
    6. Becker, Sascha O. & Ekholm, Karolina & Muendler, Marc-Andreas, 2013. "Offshoring and the onshore composition of tasks and skills," Journal of International Economics, Elsevier, vol. 90(1), pages 91-106.
    7. David H. Autor & David Dorn & Gordon H. Hanson & Jae Song, 2014. "Trade Adjustment: Worker-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1799-1860.
    8. Baldwin, Richard & Dingel, Jonathan, 2021. "Telemigration and development: On the offshorability of teleworkable jobs," CEPR Discussion Papers 16641, C.E.P.R. Discussion Papers.
    9. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    10. Giuseppe Berlingieri & Luca Marcolin & Emanuel Ornelas, 2021. "Service Offshoring and Export Experience," CESifo Working Paper Series 9126, CESifo.
    11. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    12. Michael W. Robbins & Jessica Saunders & Beau Kilmer, 2017. "A Framework for Synthetic Control Methods With High-Dimensional, Micro-Level Data: Evaluating a Neighborhood-Specific Crime Intervention," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 112(517), pages 109-126, January.
    13. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    14. Alberto Abadie, 2021. "Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 391-425, June.
    15. Fabian Stephany & Michael Dunn & Steven Sawyer & Vili Lehdonvirta, 2020. "Distancing Bonus Or Downscaling Loss? The Changing Livelihood of Us Online Workers in Times of COVID‐19," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 111(3), pages 561-573, July.
    16. Rosario Crinò, 2010. "Service Offshoring and White-Collar Employment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(2), pages 595-632.
    17. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
    18. Mary Amiti & Shang‐Jin Wei, 2009. "Service Offshoring and Productivity: Evidence from the US," The World Economy, Wiley Blackwell, vol. 32(2), pages 203-220, February.
    19. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    20. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    21. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    22. Mary Amiti & Shang-Jin Wei, 2009. "Does Service Offshoring Lead to Job Losses? Evidence from the United States," NBER Chapters, in: International Trade in Services and Intangibles in the Era of Globalization, pages 227-243, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Magli, Martina, 2022. "The Spillover Effect of Services Offshoring on Local Labour Markets," Rationality and Competition Discussion Paper Series 351, CRC TRR 190 Rationality and Competition.
    2. Magli, Martina, 2022. "The spillover effect of services offshoring on local labour markets," LSE Research Online Documents on Economics 118048, London School of Economics and Political Science, LSE Library.
    3. Martina Magli, 2022. "The spillover effect of services offshoring on local labour markets," CEP Discussion Papers dp1892, Centre for Economic Performance, LSE.
    4. David Hummels & Jakob R. Munch & Chong Xiang, 2018. "Offshoring and Labor Markets," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 981-1028, September.
    5. Tomasz Serwach, 2022. "The European Union and within-country income inequalities. The case of the New Member States," Working Papers hal-03548416, HAL.
    6. Tomasz Serwach, 2023. "The European Union and within‐country income inequalities. The case of the new member states," The World Economy, Wiley Blackwell, vol. 46(7), pages 1890-1939, July.
    7. Egger, Hartmut & Kreickemeier, Udo & Moser, Christoph & Wrona, Jens, 2024. "Offshoring and job polarisation between firms," Journal of International Economics, Elsevier, vol. 148(C).
    8. Matilde Cardoso & Pedro Cunha Neves & Oscar Afonso & Elena Sochirca, 2021. "The effects of offshoring on wages: a meta-analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(1), pages 149-179, February.
    9. Konstantin Koerner & Mathilde Le Moigne, 2023. "FDI and onshore task composition: evidence from German firms with affiliates in the Czech Republic," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-42, December.
    10. Martina Magli, 2020. "The Direct and Indirect Effect of Services Offshoring on Local Labour Market Outcomes," CESifo Working Paper Series 8413, CESifo.
    11. Eppinger, Peter S., 2019. "Service offshoring and firm employment," Journal of International Economics, Elsevier, vol. 117(C), pages 209-228.
    12. Fredrik Heyman & Fredrik Sjöholm, 2019. "Globalization, Job Tasks and the Demand for Different Occupations," Travail et Emploi, La DARES, vol. 0(1), pages 67-91.
    13. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2020. "Wage response to global production links: evidence for workers from 28 European countries (2005–2014)," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(4), pages 769-801, November.
    14. Andrea Ariu & Katariina Nilsson Hakkala & J. Bradford Jensen & Saara Tamminen, 2019. "Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata," NBER Working Papers 26355, National Bureau of Economic Research, Inc.
    15. Nicola Gagliardi & Benoît Mahy & François Rycx, 2020. "Trade, GVCs, and wage inequality: Theoretical and empirical insights," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 115-134.
    16. Zouheir El-Sahli & Joakim Gullstrand & Karin Olofsdotter, 2022. "The external effects of offshoring on job security in SMEs," Small Business Economics, Springer, vol. 59(4), pages 1613-1640, December.
    17. Baumgarten, Daniel & Irlacher, Michael & Koch, Michael, 2020. "Offshoring and non-monotonic employment effects across industries in general equilibrium," European Economic Review, Elsevier, vol. 130(C).
    18. Roy Cerqueti & Raffaella Coppier & Alessandro Girardi & Marco Ventura, 2022. "The sooner the better: lives saved by the lockdown during the COVID-19 outbreak. The case of Italy," The Econometrics Journal, Royal Economic Society, vol. 25(1), pages 46-70.
    19. Liu, Runjuan & Trefler, Daniel, 2019. "A sorted tale of globalization: White collar jobs and the rise of service offshoring," Journal of International Economics, Elsevier, vol. 118(C), pages 105-122.
    20. Winkler, Erwin, 2020. "Diverging paths: Labor reallocation, sorting, and wage inequality," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224535, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Service offshoring; Offshoring;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rif:wpaper:97. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kaija Hyvönen-Rajecki (email available below). General contact details of provider: https://edirc.repec.org/data/etlaafi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.