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Since the mid‐1990s, offshore production has become increasingly important in white‐collar, service sector activities in the US economy. This development coincided with a stagnant gender wage gap in the service sector and a slowdown in the narrowing of the overall US gender wage gap over this period. This paper aims to categorize white‐collar service sector occupations into two groups based on whether an occupation is at risk of being offshored and to assess the relative contribution of these two groupings, through their employment and wages, to the trends in the gender wage gap within the service sector and the US economy between 1995 and 2005.

Standard occupational decomposition methods are applied to Current Population Survey and Displaced Workers Survey data.

The findings show that in occupations at risk of being offshored, low‐wage women's employment declined, leading to an artificial increase in the average wage of the remaining women thereby narrowing the gender wage gap. This improvement in the gender wage gap was offset by the relative growth of high‐wage male employment in at‐risk occupations and the widening of the gender wage gap within not‐at‐risk occupations.

These findings contribute to the growing literature on the causes of the stagnation of the US gender wage gap in the 1990s.