While the risk of technological disruption to the labor market tends to grab most of the headlines, offshoring is at least as big a risk, if not more so. Research from Chicago Booth explores how countries can help people whose livelihoods are affected by offshoring.

The researchers analyzed administrative microdata at the individual worker level. This allowed them to link up each worker with any training programs they were assigned to, and their subsequent labor-market outcomes.

Tracking progress

The researchers monitored each worker for over 10 years, with two key types of training assessed. The first of these was a classroom-based program designed to help build human capital, with participants earning certificates in various new skills.

The second intervention was job training, with apprenticeship-type approaches subsidized by the government. The aim was to get people’s foot in the door and allow them to build from there.

The analysis found that classroom training did appear to help people find new work, with the typical worker gaining 25 hours more work each month a few years after participating in the program. This is largely because the reskilling helped people to move into new occupations.

Valued work

The researchers explain that this underlines the value this training seems to have in the labor market, with participants greatly helped in their job search. This was especially so for those who faced structural challenges in the labor market, such as their job being offshored.

The job training programs weren’t as effective, however, with the benefits tending to fade once the wage subsidies eased off. As a result, the researchers believe that classroom training is probably the best approach for supporting workers whose jobs are affected by offshoring.

The study clearly demonstrates that investing in the skills and knowledge of displaced workers is a smart move. It can transform someone who would have relied on government benefits into a taxpayer who contributes to society.