Labor market patterns in offshoring-receiving countries: Evidence from Poland

Sammanfattning: Labor markets in highly industrialized countries in Western Europe and the United States have polarized over the last decades, which means that the share of middle-income occupations has decreased relative low- and high-income occupations. Two potential explanations for this are routine-biased technological change (RBTC) and offshoring, which both are expected to reduce middle-income occupations in highly industrialized countries. This study makes a first contribution to fill a gap in this research by investigating how labor markets are affected in relatively well-developed countries that are mainly receiving offshoring, such as Poland. Offshoring should, if it is an influential factor, work against a polarization in the labor markets in offshoring-receiving countries. The results show that no job polarization is present in Poland over the time period 1997-2010. However, the employment structure appears to be relatively unaffected by offshoring and routineness. There are no signs of polarization in relative wage development. In fact, change in wages consists of two trends: prior to 2004 high-income occupations experienced the largest wage growth, but after 2004, high-income occupations had the smallest wage growth. Overall, offshoring does not have a substantial effect on the Polish labor market. Routineness does have significant impact on wages, but so does skill level. The results suggest that skill-biased technological change (SBTC) might be a key factor for the Polish labor market, rather than RBTC.