Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 654: The Effect of Offshoring on Labor Demand: Evidence from Sweden

Karolina Ekholm and Katariina Hakkala ()
Additional contact information
Karolina Ekholm: Stockholm School of Economics, Postal: P.O. Box 6501, SE-113 83 Stockholm, Sweden, and Centre for Business and Policy Studies (SNS), P.O, Box 5629, SE-114 86 Stockholm, Sweden
Katariina Hakkala: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: We analyze the effects of offshoring of intermediate input production on labor demand in Sweden, distinguishing between workers with different educational attainments. The econometric results using data for the 1995-2000 period indicate that offshoring -- in particular to low-income countries -- tends to shift labor demand away from workers with an intermediate level of education. Offshoring to high-income countries, which is the largest component of overall offshoring, does not have any statistically significant effect on the composition of labor demand.

Keywords: Offshoring; Labor Demand; Translog Cost Function; Factor-Biased Technological Change

JEL-codes: F16

40 pages, December 8, 2005

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