Employment Impacts of Globalization: The Impact of Service Offshoring on Displaced Workers Post-Displacement Outcomes
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Kandilov, Ivan T.
[Excerpt] The employment effects of service trade is a topic of significant importance, especially in light of the recent rise in services offshore outsourcing to low-wage destinations such as India and China. In this paper, I study the impact of service trade, separating the effects of service imports (offshore outsourcing) from those of service exports, on the unemployment duration and the reemployment wages of workers dislocated from the service sector of the U.S. economy. Investigating these outcomes provides implications for policies that deal with displaced workers’ transitions from unemployment back to work. Further, analyzing jobless spell duration and re-employment wages also sheds light on the issue of transferability of skills used by U.S. workers as they switch industries and occupations in the face of international trade shocks. In particular, recent work by Kandilov (2009), as well as Kambourov and Manovskii (2008a and 2008b), shows evidence that U.S. manufacturing workers possess industry and occupation specific human capital that is lost in the job transition from one to industry (occupation) to another.
globalization; service trade; offshore outsourcing; service imports; service exports; unemployment duration; re-employment