Offshoring, wages and job security of temporary workers

Abstract

Temporary contracts have become an important mode of employment in many countries. We investigate the impact of offshoring on individual level wages and unemployment probabilities and pay particular attention to the question if workers with temporary contracts are affected differently than workers with permanent contracts. Data are taken from the German Socio-Economic Panel, linked with industry level data on offshoring. We do not find systematic differences between temporary and permanent workers with respect to the effects of offshoring for wages. We find, however, that offshoring increases the unemployment risk of low-skilled workers, and more so for temporary than permanent workers. Also, offshoring reduces the unemployment risk for all high- and medium-skilled workers.