Offshoring and well-being of workers

Abstract

Using long panels of industry-specific offshoring information and subjectively reported well-being datasets mainly from Germany, which is also supported by datasets from the UK and Australia, this paper aims to investigate the relationship between offshoring and workers’ subjective well-being in the source country. We employ panel data fixed-effects models with time-variant personality measures and industry-specific measures to alleviate the bias stemming from the non-random sorting of individuals in industries. Our findings suggest that offshoring negatively relates to workers’ subjective well-being. The result is unexceptionally consistent across Germany, the UK, and Australia, and the effect is larger in business services and among high-skilled workers. We extensively discuss how contextual “fear-factors” prevailing in the source countries interact with the angst generated by the negative framing of offshoring. To single out such angst, we first show that objective and subjective job security concerns, job characteristics, and labor market conditions only marginally relate to the well-being effect of offshoring. Then, we investigate how the effect of offshoring on well-being is amplified by a larger set of contextual factors pertaining to temporary economic shocks, negative narratives about offshoring during electoral cycles, partisan political preferences, and high immigration rates. Finally, we show that a recent skill upgrade significantly diminishes the negative effect of offshoring on well-being.