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Offshoring and Skill-upgrading in French Manufacturing: A Heckscher-Ohlin-Melitz View

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  • Juan Carluccio
  • Alejandro Cuñat
  • Harald Fadinger
  • Christian Fons-Rosen

Abstract

We present a factor-proportions trade model in which heterogeneous firms can offshore intermediate inputs subject to fixed offshoring costs. In the skill-abundant country, high- productivity firms offshore a larger range of labor-intensive inputs to the labor-abundant countries than low-productivity firms. Differently from the traditional versions of factor- proportions trade theory, Heckscher-Ohlin forces operate at the within-industry level, leading to endogenous variation in skill intensity across firms that is positively correlated with firm productivity. Using French firm-level data for the years 1996 to 2007, we provide empiri- cal support for the factor proportions channel through which offshoring to labor-abundant countries affects the firm-level skill intensities of French manufacturers.

Suggested Citation

  • Juan Carluccio & Alejandro Cuñat & Harald Fadinger & Christian Fons-Rosen, 2015. "Offshoring and Skill-upgrading in French Manufacturing: A Heckscher-Ohlin-Melitz View," CeFiG Working Papers 22, Center for Firms in the Global Economy, revised 29 Sep 2015.
    • Handle: RePEc:cfg:cfigwp:22
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    Cited by:

    1. Francesco Bogliacino & Dario Guarascio & Valeria Cirillo, 2018. "The dynamics of profits and wages: technology, offshoring and demand," Industry and Innovation, Taylor & Francis Journals, vol. 25(8), pages 778-808, September.
    2. Carluccio, Juan & Cuñat, Alejandro & Fadinger, Harald & Fons-Rosen, Christian, 2019. "Offshoring and skill-upgrading in French manufacturing," Journal of International Economics, Elsevier, vol. 118(C), pages 138-159.
    3. Vincent Bignon & Cecilia Garcia-Peñalosa, 2017. "The long-term cost of protectionism for education," Rue de la Banque, Banque de France, issue 47, september.
    4. Juan Carluccio & Alejandro Cuñat & Harald Fadinger & Christian Fons-Rosen, 2017. "Winners and losers from globalisation: offshoring benefits skilled workers and hurts the less skilled," Rue de la Banque, Banque de France, issue 51, november.

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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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