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Trade, tasks and training: The effect of offshoring on individual skill upgrading
Author(s) -
Hogrefe Jan,
Wrona Jens
Publication year - 2015
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12156
Subject(s) - offshoring , grossman , retraining , training (meteorology) , margin (machine learning) , business , labour economics , outsourcing , wage , industrial organization , economics , marketing , computer science , international trade , physics , machine learning , meteorology , keynesian economics
We offer a theoretical explanation and empirical evidence for a positive link between increased offshoring and individual skill upgrading. Skill upgrading takes the form of on‐the‐job training, complementing the existing literature, which mainly focuses on the retraining of displaced workers. To establish a link between offshoring and on‐the‐job training, we introduce an individual skill upgrading margin into the Grossman and Rossi‐Hansberg model of offshoring. By scaling up worker's wages, offshoring creates previously unexploited skill upgrading possibilities, which lead to more training. Using data from German manufacturing, we establish a causal link between industry‐level offshoring growth and increased individual skill upgrading.