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Offshoring Intensities and Skill Upgrading of Employment in the Slovak Republic

Ďurčová, Júlia and Mirdala, Rajmund (2016): Offshoring Intensities and Skill Upgrading of Employment in the Slovak Republic. Published in: Journal of Applied Economic Sciences , Vol. 11, No. 8 (December 2016): pp. 1600-1612.

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Offshoring representing one of the main characteristics of the current stage of globalization contributed to reduction of the demand for relative unskilled workers resulting in falling wages of unskilled labor in developed countries. The shift away from low-skilled workers is driven by offshoring to Central and Eastern Europe (CEE) countries However, the Slovak Republic, like other European countries experienced considerable skill upgrading of employment over past decade. The study of intertemporal sectorial development of employment and growth rate of person engaged clearly indicates a change in the structure of employment. Therefore it is interesting to examine how offshoring and domestic outsourcing influences these trends. In order to estimate the impact of offshoring on skill structure of labor demand in the Slovak Republic the system of cost share equations will be derived from translog cost function. The equations for different cost shares are estimated using seemingly unrelated regression (SUR). Our results indicate that offshoring contribution to the change of employment share in case of low and medium skill-levels was negative while positive for high-skilled labor demand.

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