Offshoring is modelled as a positive technological change introduced as a cost of coordination.1 As these costs fall, firms adapt their production strategies. On the one hand, offshoring will make some of the low-skilled workers redundant thereby exercising downward pressure on low-skilled wages. This is the more commonly expected negative effect on low-skilled wages—the labour supply effect. The predictions of this model are therefore ambiguous relative to those in the HOS framework and depend on the type of task which is offshored as well as whether the productivity effect dominates the other effects.