Offshoring and Occupational Wages: Some empirical evidence

Abstract

Offshoring has changed the pattern of international competition; labor in specific occupations rather than whole firms and sectors are now facing competition. Accordingly, wages in offshorable occupations are affected in new ways. In this paper we investigate the effects of offshoring of electronically traded services on relative occupational wages in 13 countries in the 1990-2003 period. Our findings show that increased exports of IT-related services lead to higher relative wages in offshorable occupations, whereas increased imports of such service reduce them. There is also some evidence that the impact of offshoring on relative wages is larger the lower the level GDP per capita.