Trade,tasks and training: The effect of offshoring on individual skill upgrading |
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| Authors: | Jan Hogrefe Jens Wrona |
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| Institution: | 1. Centre for European Economic Research (ZEW);2. Heinrich‐Heine‐University Düsseldorf;3. Düsseldorf Institute for Competition Economics (DICE) |
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| Abstract: | 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 ( 2008 ) 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. |
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