Blanas, Sotiris (2017) Offshoring and the Age-Skill Composition of Labour Demand. Working Paper. Lancaster University, Department of Economics, Lancaster.
Abstract
This paper is the first to study the impact of offshoring on the age-skill composition of labour demand. In doing so, it provides novel empirical evidence firmly supporting the argument that the age profile of a worker is at least as crucial a criterion as the skill to be taken into account by firms while they make optimal labour utilisation adjustments through offshoring. The analysis is conducted on a sample of manufacturing and service industries in 12 developed countries for the period 1995-2005. Its main findings are that material and service offshoring to high-income countries decrease the relative demands for older more skilled workers, while they increase the relative demands for the youngest less skilled. In addition, material and service offshoring to low/middle-income countries decrease the relative demands for the youngest workers, while they mostly increase the relative demands for older workers. These findings are explained by the relative abundance of offshoring destinations in skills and in aspects of employment associated with workers' age profiles, such as the level of human capital and expertise, the returns to training and the level of employment protection.