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Title:Offshoring and labor income risk PDF Logo
Authors:Hogrefe, Jan
Yao, Yao
Issue Date:2012
Series/Report no.:ZEW Discussion Papers 12-025
Abstract:This paper analyzes the impact increased offshoring has on labor income risk. It is therefore distinct from a large number of studies explaining the level effects of globalization on the labor market in that it takes a look at effects on second moments, i.e. the variance of incomes. It provides an assessment that directly connects labor income risk and offshoring trends at the sector level. Importantly, we distinguish between transitory and permanent shocks to individual income. Permanent income risk is defined as variance of shocks to income that do not fade out over time and are assumed to be not self-insurable. It thus has a particular relevance for individual welfare. Our findings suggest that offshoring tends to lower permanent income risk. This effect is particularly strong for offshoring to low-income destinations. Hence, there could be potential welfare gains when domestic firms increasingly offshore production to foreign countries.
Subjects:trade
offshoring
wages
labor income risk
JEL:F16
F23
E24
Persistent Identifier of the first edition:urn:nbn:de:bsz:180-madoc-322210
Document Type:Working Paper
Appears in Collections:ZEW Discussion Papers
Publikationen von Forscherinnen und Forschern des ZEW

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