%0 Report
        %A Kim, Gueyon
%A Lee, Dohyeon
%A Pozzoli, Dario
        %T Offshoring, Matching, and Wage Inequality: Theory and Evidence
        %D 2025
        %8 2025 Jan
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 17663
        %U https://www.iza.org/publications/dp17663
        %X This paper examines how offshoring affects worker skill demands and studies its implications for wage inequality. Using Danish administrative data, we find that offshoring increases firm-level demand for higher skills in occupations with high exposure to foreign competition. This effect is more pronounced in low-productivity firms, highlighting distributional impacts across firms. By constructing a Becker-type worker-firm matching model in a global economy, we demonstrate underlying mechanisms and quantify the role of offshoring-induced adjustments. Offshoring increases firm similarity in worker skill and wages within high-exposed jobs, leading to a decrease in between-firm inequality—a contrast to the effects of technological change.
        %K offshoring
%K worker-firm matching
%K segregation by skill
%K wage inequality
%K between-firm inequality