Trade, tasks and training: The effect of offshoring on individual skill upgrading

摘要

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.