Offshoring, reskilling and the role of occupational task content

This paper studies how a labour demand readjustment driven by offshoring generates the need for reskilling of employees through the task content of their occupation. The heterogeneity of the trade impact across occupations induces a different demand for reskilling, since skills accumulated in some occupations are more easily adaptable to new jobs and workers endowed with such abilities can reallocate faster in the labour market. The rising supply capacity of China at the turn of the 21st century is exploited as a quasi-natural experiment to recover exogenous variation in firm-specific propensity to offshore and matched employer-employees administrative data on adult continuing education are used to assess reskilling activity. Results show that offshoring induces enrollment in training courses comparatively more for individuals employed in occupations with a higher routine-manual task content and which are more specific compared to the average labour market task composition. The effect of offshoring on earnings also varies along the occupational dimension. A possible mechanism explaining the observed heterogeneity focuses on the ability of workers in different occupations to move to new tasks. Individuals more adversely affected by offshoring are those that find more difficult to move to other occupations in the labour market. Retraining is used by firms to reallocate some workers to other tasks within the same organizational structure.