Ricerc@Sapienza

This article explores the impact of innovation, offshoring and demand on profits and wage dynamics. Empirical analysis is performed on a panel of 37 industries (1995–2010) across five European countries. Our identification strategy relies on instrumental variables and recently proposed heteroskedasticity-based instruments. Additionally, we perform sensitivity analysis to account for omitted variables bias. The main results of our study can be summed up in three points. First, it highlights the contrasting effects of R&D and offshoring as wage determinants.

tThis paper assesses the employment impact of offshoring in five European countries (Germany, Spain,France, Italy and the United Kingdom), distinguishing between different types of inputs/tasks offshored,different types of offshoring industries and types of professional groups. The empirical evidence showsthat offshoring activities are mainly driven by a cost reduction (labour saving) rationale.