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Immigration, Offshoring and American Jobs

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  • Gianmarco I. P. Ottaviano
  • Giovanni Peri
  • Greg C. Wright

Abstract

How do offshoring and immigration affect the employment of native workers? What kinds of jobs suffer, or benefit, most from the competition created by offshore and immigrant workers? In contrast to the existing literature that has mostly looked at the effects of offshoring and immigration separately, we argue that one can gain useful insights by jointly investigating the interactions among native, immigrant and offshore workers. We develop our argument in three steps. First, we present some new facts on 58 U.S. manufacturing industries from 2000 to 2007. Second, we build on Grossman and Rossi-Hansberg (2008) to design a model of task assignment among heterogeneous native, immigrant and offshore workers that fits those facts. Third, we use the model to draw systematic predictions about the effects of immigration and offshoring on native workers and we test these predictions on the data. We find that, within the manufacturing sector, immigrants do not compete much with natives, as these two groups of workers are relatively specialized in tasks at opposite ends of the skill intensity spectrum. Offshore workers, on the other hand, seem to be specialized in tasks of intermediate skill intensity. We also find that offshoring has no effect on native employment in the aggregate, while the effect of immigration on native employment is positive. This hints at the presence of a "productivity effect" whereby offshoring and immigration improve industry efficiency, thereby creating new jobs.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1147.

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Date of creation: May 2012
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Handle: RePEc:cep:cepdps:dp1147

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Employment; production tasks; immigrants; offshoring;

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References

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  1. Heather Antecol & Deborah A. Cobb-Clark & Stephen J. Trejo, . "Immigration Policy and the Skills of Immigrants to Australia, Canada, and the United States," Claremont Colleges Working Papers 2001-26, Claremont Colleges.
  2. Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2009. "Why are American Workers getting Poorer? Estimating the Impact of Trade and Offshoring Using the CPS," NBER Working Papers 15107, National Bureau of Economic Research, Inc.
  3. Giovanni Peri & Chad Sparber, 2008. "Task Specialisation, Immigration and Wages," Development Working Papers 252, Centro Studi Luca d\'Agliano, University of Milano.
  4. Maarten Goos & Alan Manning, 2003. "Lousy and lovely jobs: the rising polarization of work in Britain," LSE Research Online Documents on Economics 20002, London School of Economics and Political Science, LSE Library.
  5. Monte, Ferdinando, 2011. "Skill bias, trade, and wage dispersion," Journal of International Economics, Elsevier, vol. 83(2), pages 202-218, March.
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  19. Chassamboulli, Andri & Palivos, Theodore, 2010. ""Give me your Tired, your Poor," so I can Prosper: Immigration in Search Equilibrium," MPRA Paper 32379, University Library of Munich, Germany.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How Immigration Reduces Offshoring
    by Ariel Goldring in Free Market Mojo on 2010-11-06 12:00:47
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Heid, Benedikt & Larch, Mario, 2012. "Migration, trade and unemployment," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(4), pages 1-40.
  2. David Hummels & Rasmus Jørgensen & Jakob R. Munch & Chong Xiang, 2011. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," NBER Working Papers 17496, National Bureau of Economic Research, Inc.
  3. E. Podrecca & G. Rossini, 2012. "Wages and international factors’ mobility," Working Papers wp826, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Colantone, Italo & Crinò, Rosario, 2014. "New imported inputs, new domestic products," Journal of International Economics, Elsevier, vol. 92(1), pages 147-165.
  5. Malchow-Møller, Nikolaj & Munch, Jakob R. & Seidelin, Claus Aastrup & Skaksen, Jan Rose, 2013. "Immigrant Workers and Farm Performance: Evidence from Matched Employer-Employee Data," IZA Discussion Papers 7133, Institute for the Study of Labor (IZA).
  6. Wright, Greg C., 2014. "Revisiting the employment impact of offshoring," European Economic Review, Elsevier, vol. 66(C), pages 63-83.
  7. Cristina Mitaritonna & Gianluca Orefice & Giovanni Peri, 2014. "Immigrants and Firms' Productivity: Evidence from France," Working Papers 2014-09, CEPII research center.
  8. Gianmarco Ottaviano & Giovanni Peri, 2013. "New Frontiers Of Immigration Research: Cities And Firms," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 1-7, 02.
  9. Cosimo BEVERELLI & Gianluca OREFICE & Nadia ROCHA, 2011. "Offshoring and migration in a world with policy spillovers," Departmental Working Papers 2011-25, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  10. Hugo Rojas-Romagosa, 2011. "Wage inequality in trade-in-tasks models," CPB Discussion Paper 196, CPB Netherlands Bureau for Economic Policy Analysis.
  11. Michael J. Boehm, 2013. "Has Job Polarization Squeezed the Middle Class? Evidence from the Allocation of Talents," CEP Discussion Papers dp1215, Centre for Economic Performance, LSE.
  12. Geishecker, Ingo & Riedl, Maximilian & Frijters, Paul, 2012. "Offshoring and job loss fears: An econometric analysis of individual perceptions," Labour Economics, Elsevier, vol. 19(5), pages 738-747.
  13. Michael J. Boehm, 2013. "Has job polarization squeezed the middle class? Evidence from the allocation of talents," LSE Research Online Documents on Economics 51554, London School of Economics and Political Science, LSE Library.
  14. Ejaz Ghani & William R. Kerr & Christopher T. Stanton, 2012. "Diasporas and Outsourcing: Evidence from oDesk and India," NBER Working Papers 18474, National Bureau of Economic Research, Inc.

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