New Measurements of Offshoring and Skill Structure in the U.S. Labour Market

Sung-min Kim and Jin-tae Hwang*

Abstract

We examine the relationship between offshoring and the structural change in employment in the 2000s. Considering the recent patterns in international trade, we adopt a broad measure of offshoring along with material and service measures. Using quasi-maximum likelihood estimation with the bounded nature of skill group’s shares of wages and hours worked, we find that the broad measure of offshoring is more significantly related to the U.S. labour market than the narrow measure of offshoring. We also find that the effects of service offshoring on the labour market are insignificant in the manufacturing industries, but they are substantial in the professional and service industries.

Keywords: Offshoring Measures, Skill Demand, Polarisation

JEL Classification Numbers: F16, F23, J24

* Research Professor, Asiatic Research Institute, Korea University, 145, Anam-ro, Seongbuk-gu, Seoul, Korea, 136-701, Tel: +82-2-3290-5246, E-mail: java0215@gmail.com or sm0910@korea.ac.kr; Research fellow, Korea Insurance Research Institute, Seoul, Korea, E-mail: jt0813@kiri.or.kr