Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314560 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17663
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper examines how offshoring affects worker skill demands and studies its implications for wage inequality. Using Danish administrative data, we find that offshoring increases firm-level demand for higher skills in occupations with high exposure to foreign competition. This effect is more pronounced in low-productivity firms, highlighting distributional impacts across firms. By constructing a Becker-type worker-firm matching model in a global economy, we demonstrate underlying mechanisms and quantify the role of offshoring-induced adjustments. Offshoring increases firm similarity in worker skill and wages within high-exposed jobs, leading to a decrease in between-firm inequality—a contrast to the effects of technological change.
Subjects: 
offshoring
worker-firm matching
segregation by skill
wage inequality
between-firm inequality
JEL: 
C78
F14
F16
J24
J31
Document Type: 
Working Paper

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