Offshoring and Wage Inequality: Using Occupational Licensing as a Shifter of Offshoring Costs

摘要

A recent set of theories have studied the impact of changes in offshoring cost on wages and employment (e.g., Grossman and Rossi-Hansberg, 2008 and references therein). Testing these theories has been challenging, given the difficulty of finding measures of offshorability. In this paper we propose and apply a new empirical strategy to test these theories: using legal licensing requirements that limit the ability of certain tasks to be undertaken offshore. This has allowed us to study, for a given skill group, the impact of a drop in offshoring cost, by comparing subsets of occupations for which this drop is relevant (nonlicensed occupations) and those for whom the drop in offshoring is irrelevant (licensed occupations).