Offshoring: Why Do Stories Differ?

This paper identifies critical modeling choices, as well as differences in the driving forces behind offshoring, that may explain differences in results. Offshoring of industry-specific tasks has wage and employment effects that are vastly different from those identified in Grossman & Rossi-Hansberg (2006), depending on how the industries differ in their average and marginal skill-intensities, respectively. Structural adjustment may occur at the intensive margin and the extensive margin (offshoring), and it may occur in opposite directions or the same direction at both margins, again depending on how industries differ in terms of their average and marginal skill-intensity.