Offshoring, Skill Demand, and Structural Change in Occupation

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