Abstract

In this paper, we examine the relationship between service offshoring and overall wage inequality in the U.S. labor market. Using data from CPS, EU KLEMS, and WIOD, we find that service offshoring shows a biased pattern on wage inequality in that it would affect largely a certain class who work in the service sector, not all sectors. Specifically, service offshoring would enlarge both the 90/10 and 90/50 wage gaps in the service sector. This implies that it can substitute in part for the middle-skill group in the service sector, reducing the relative skill premium of the corresponding workers

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