Offshoring widens wage gaps, hits low-skilled workers hardest in Germany.
Offshoring in Germany from 1995 to 2007 favored high-skilled workers over low-skilled ones, especially in manufacturing and to Central/Eastern Europe. The labor market adjusted through wage changes rather than employment shifts. Medium-skilled workers in the service sector were most affected by offshoring, possibly due to task differences. Additionally, medium-skilled workers were negatively impacted by technological changes, leading to a polarization in labor demand.