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Service Offshoring and the Skill Composition of Labour Demand

Authors


  • The author is also a research affiliate of MOVE, Centro Studi ‘L. D’ Agliano’, and Fondazione Rodolfo Debenedetti. The author thanks the editor Beata Javorcik, two anonymous referees, and Paolo Epifani and Anna Falzoni for very useful comments on a previous version of the paper. The author has benifitted from the participants in the Aachen Workshop on International Production (Aachen 2009), ETSG (Warsaw 2008), IAE (Barcelona 2008), IT&FA (Lisbon 2008), KITeS (Milan 2008), Unicredit (Milan 2008), the University of Bergamo (Bergamo 2008) and the University of Milan (Milan 2008). Financial support from the Barcelona GSE Research Network, the Government of Catalunya, the Spanish Ministry of Science and Innovation (Project ECO 2009-07958), the Italian Ministry for Education, University and Research, Unicredit Group and Bocconi University is gratefully acknowledged. The usual disclaimer applies.

Abstract

This article studies the effects of service offshoring on the skill composition of labour demand, using novel comparable data for nine Western European countries between 1990 and 2004. The results show that service offshoring raises the relative demand for high- and medium-skilled workers. Its effects are qualitatively identical, and quantitatively similar, to those of material offshoring. Additional evidence suggests, however, that the two types of offshoring may work through different channels: complementarity between imported services and domestic skills in the case of service offshoring, substitution of low-skilled labour in the case of material offshoring. Overall, the effects are not large in economic terms.

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