Estimating the Impact of Trade and Offshoring on American Workers Using the Current Population Surveys

Abstract

We link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys from 1984 to 2002. We find that occupational exposure to globalization is associated with significant wage effects, while industry exposure has no significant impact. We present evidence that globalization has put downward pressure on worker wages through the reallocation of workers away from higher-wage manufacturing jobs into other sectors and other occupations. Using a panel of workers, we find that occupation switching due to trade led to real wage losses of 12 to 17 percentage points. . We find that occupational exposure to globalization is associated with significant wage effects, while industry exposure has no significant impact. We present evidence that globalization has put downward pressure on worker wages through the reallocation of workers away from higher-wage manufacturing jobs into other sectors and other occupations. Using a panel of workers, we find that occupation switching due to trade led to real wage losses of 12 to 17 percentage points.

Trading away what kind of jobs? Globalization, trade and tasks in the US economy

“…Others more directly measure the current relationship between offshoring and onshore task structure. Ebenstein et al (2009) match occupational data with the Current Population Survey (CPS) to show that the wages of domestic workers performing nonroutine tasks in US multinational enterprises (MNEs) are less affected by trade with subsidiaries in developing economies than the wages of workers that perform routine tasks. Similarly, Becker et al (2008) use microdata on workers and trade in German MNEs to show that the ratio of nonroutine-to-routine workers increases through related-party trade with developing economies.…”

Offshoring and Wages

“…Another important study in this area was conducted by Ebenstein et al (). They use data on total employment of foreign affiliates of US multi‐national firms to measure offshoring.…”

“…As a result, unlike the paper described above, they are able to examine the impact of both service and materials offshoring. Ebenstein et al () match their offshoring data to individual‐level data from the US Current Population Survey (CPS), covering the period 1983–2002. The CPS data provide industry and occupation information on 3.4 million workers.…”

Workers’ Participation in Training and Import Competition: Evidence from the USA

“…This is a relatively small, but growing literature as older studies in this area have generally relied on industry‐level data. Worker‐level data has been used to investigate the effect of globalisation on wages (Kosteas, ; Ebenstein et al., ), offshoring on the skill premium (Tempesti, ), the sensitivity of wages to the unemployment rate as foreign competition increases (Bertrand ) for US workers in the manufacturing sector and the effect of trade‐induced job displacement on wages in occupations receiving these displaced workers (Kosteas and Park, ). As with the present analysis, each of these studies merges industry‐level trade data with individual‐level data using either NLSY (Kosteas, ; Kosteas and Park, ), CPS data (Bertrand , Ebenstein et al., and Tempesti, ) or the Panel Study of Income and Dynamics (Kosteas and Park, ).…”