Labour Demand, Offshoring and Inshoring: Evidence from Swedish Firm‐level Data

Abstract

The objective of this paper was to analyse effects on firm–level relative demand for skilled labour due to imports of intermediates (offshoring) and exports of intermediates (inshoring). The study is based on a data set of Swedish manufacturing firms, 1997–2002, using trade flows in intermediate goods and services, respectively. Descriptive data show that goods inshoring is much larger than goods offshoring, while the reverse is true for services. There is, however, a strong increase in services inshoring over the study period. Controlling for potential endogeneity in offshoring and inshoring, our results indicate that there is a positive effect of services offshoring on the skill composition of workers in Swedish firms, while no such causality can be established from inshoring.

National and Sub-National Offshoring Impact on Employment: An Application to Madrid Region

“…On the other hand, Baumgarten, et al (2013) show a negative cross-industry effect of offshoring on wages, however, labour developing non-routine tasks were less likely to suffer a negative wage impact due to offshoring. Complementary, Andersson et al (2016) found that the relative demand for high-skilled labour tends to increase due to offshoring of services, while there is no statistically significant effect of inshoring per se. They also found that knowledge-intensive services such as 'computer and information services' and 'financial services' are positively associated with relative demand for skilled labour.…”

“…From textile, shoes or electronics firms that nowadays import from China, India or Morocco those merchandises they previously produced and they now focus on design, innovation and distribution, to phone companies that contract phone customer services in Tangiers, or business services firms that subcontract software consultancy services abroad or financial firms that operate with other financial firms abroad, affiliates or not. A lot of those business and distribution services exhibit the characteristics required for their relocation and provision from abroad (Bardhan and Kroll, 2003): no face-to-face required, high information content, possibility for working on the net, high wages differential between countries, low barriers, etc.…”

“…Another original element in this paper is taking into account the offshoring and international and sub-national relocation impact on employment for the whole economy and not only the manufacturing industries, as is usual in the literature. We need to incorporate in our analyses services industries as, firstly, they employ most people in the economy and, secondly, they are the main agent in the so-called second offshoring, which focuses on qualified labour fundamentally in services compared to the offshoring of less-qualified labour of manufacturing activities (Andersson et al, 2016). In this sense, Cadarso et al (2008b) shows how imported inputs required to export in services industries for nine EU countries grow on average well above those of manufacturing industries in 1995-2000 (9% average in manufacturing vs. 37% in services).…”

Offshoring within South African manufacturing firms: An analysis of the labour market effects

“…The theoretical basis for the specification is found in the literature. Andersson et al (2017) estimate labour demand as a function of the level of capital in the firm and the level of output (or production). They further add the relative wage between skilled and unskilled workers when estimating demand specifically for skilled or unskilled workers.…”

“…However, in the absence of such policy changes (i.e. where the trade environment is stable, without significant changes in trade policy), it is suggested in the literature that an import flow, namely world export supply (WES), be used (see for example Andersson et al, 2017;Balsvik and Birkeland 2012;Hummels et al 2014).…”