We analyze the effects of low-skill offshoring on welfare. In the context of a matching model with different possible
equilibria we discuss three alternative policies that could potentially outweigh the negative welfare effects
of offshoring, namely, a change of the unemployment benefits, labor market flexibility, and a progressive tax
structure. Our calibrations for the German economy suggest that increased flexibility can bring low-skill workers
to pre-offshoring welfare levels, something that cannot be accomplished by meddling with the unemployment
benefits scheme or a more progressive tax structure. In addition, we find that a full compensation can be achieved
by an upgrading of low-skill workers, its size depending on the type of equilibrium involved. In sum, our analysis
gives support to labor market flexibility and upgrading by education as best therapies for offshoring