Working Paper No. 1074

Offshoring, Total Factor Productivity and Skill-Biased Technological Change

Published: June 18, 2015Pages: 49Keywords: Offshoring; Total factor productivity; Skill-biased technological change; Relative skilled labor demandJEL-codes: D24; F14; F16

Offshoring, Total Factor Productivity and Skill-Biased Technological Change Zhanar Akhmetova and Shon Ferguson

The paper answers two questions simultaneously. What is the effect of offshoring on firms' total factor productivity? What is the effect of offshoring on skill-biased technological change? We estimate a model of firm production that allows for the effect of offshoring on both total factor productivity and relative skilled labor productivity, and for spillovers between the two. The model is fitted to Swedish firm-level data between 2001–2011.

We find positive effects of offshoring intensity on total factor productivity, particularly of small domestic firms and large foreign-owned firms, and on skill-biased technological change in production of firms with low offshoring intensity. Initiating offshoring results in skill-biased technological change in non-production activities of large domestic firms. We show that evaluating the impact of offshoring in a unified framework has implications for the estimation results.

Shon Ferguson


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Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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