Automation and Offshoring on Wage Inequality in Japan

I examine the effect of task displacement from automation technology and offshoring on wage inequality using data for Japan since 1980. First, I do not find evidence that task displacement from automation increases wage inequality, which contrasts with the finding for the US. Second, I find that the rise in offshoring has distributional consequences and is progressive after the mid-1990s. The surge in offshoring is concentrated in industries where ex-ante low-wage workers work and disproportionally increases their wages. This increase in wages is due to the increases in monthly payroll, decreases in hours worked, decreases in employment rate, and decreases in the share of offshorable occupations.