---
title: "The Labor-market Effects of Service Offshoring: A Synthetic Control Approach with High-dimensional Microdata"
authors:
  - name: "Kässi, Otto"
    url: "https://www.etla.fi/henkilot/otto-kassi/"
    sameAs:
      - "https://orcid.org/0000-0002-8666-200X"
      - "https://scholar.google.com/citations?user=gdilg18AAAAJ"
      - "https://twitter.com/ottokassi"
date_published: "2022-10-28"
series: "ETLA Working Papers"
series_number: "97"
issn:
  - "2323-2420"
  - "2323-2439"
jel_codes:
  - "F14"
  - "C33"
  - "J31"
language: "en"
publisher: "ETLA Economic Research"
pdf_url: "https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-97.pdf"
keywords:
  - "Service offshoring"
  - "Offshoring"
identifier: "https://www.etla.fi/julkaisut/id/ETLA-Working-Papers-97"
abstract: "I use novel high-quality survey data on firms’ international sourcing activities combined with firm-level financial and linked employer–employee data to study the effect of services offshoring on wages and employment. To overcome the endogeneity related to reverse causality and omitted variables, I use microsynth, a variation of the synthetic control method specially developed for high-dimensional microdata. I find that offshoring firms pay higher wages for both high-skilled and low-skilled workers, and employ fewer FTE workers compared with a synthetic control, but these effects take several years to appear."
---

# The Labor-market Effects of Service Offshoring: A Synthetic Control Approach with High-dimensional Microdata

**Published:** 2022-10-28  
**Categories:** Working Papers  
**Tags:** ETLA-WEF  
**URL:** https://www.etla.fi/en/publications/working-papers-en/the-labor-market-effects-of-service-offshoring-a-synthetic-control-approach-with-high-dimensional-microdata/

#### Abstract

I use novel high-quality survey data on firms’ international sourcing activities combined with firm-level financial and linked employer–employee data to study the effect of services offshoring on wages and employment. To overcome the endogeneity related to reverse causality and omitted variables, I use microsynth, a variation of the synthetic control method specially developed for high-dimensional microdata. I find that offshoring firms pay higher wages for both high-skilled and low-skilled workers, and employ fewer FTE workers compared with a synthetic control, but these effects take several years to appear.

---

## Additional Information

**Kirjoittajat:** Kässi, Otto

**Kansikuva:** https://www.etla.fi/wp-content/uploads/etla-working-papers-97-kansi.jpg

**Lataa Pdf:** https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-97.pdf

**Key Words:** Service offshoring, Offshoring

**Jel:** F14, C33, J31

**Paivays:** 28.10.2022

**Sivuja:** 42

**Kieli:** en

**Sarja:** ETLA Working Papers

**Sarja Nro:** 97

**Issn:** 2323-2420, 2323-2439 (Pdf)

**Saatavuus:** 2



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