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Service Offshoring, Productivity and Employment: Evidence from the US

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Author Info
Amiti, Mary
Wei, Shang-Jin

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Abstract

The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies. This paper estimates the effects of offshoring on productivity in US manufacturing industries between 1992 and 2000, using instrumental variables estimation to address the potential endogeneity of offshoring. It finds that service offshoring has a significant positive effect on productivity in the US, accounting for around 11% of productivity growth during this period. Offshoring material inputs also has a positive effect on productivity, but the magnitude is smaller accounting for approximately 5% of productivity growth. There is a small negative effect of less than half a percent on employment when industries are finely disaggregated (450 manufacturing industries). However, this affect disappears at more aggregate industry level of 96 industries indicating that there is sufficient growth in demand in other industries within these broadly defined classifications to offset any negative effects.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5475.

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Date of creation: Jan 2006
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Handle: RePEc:cpr:ceprdp:5475

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Related research
Keywords: employment; offshoring; outsourcing; productivity; services;

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Find related papers by JEL classification:
F1 - International Economics - - Trade
F2 - International Economics - - International Factor Movements and International Business

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References listed on IDEAS
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Robert-Nicoud, Frédéric, 2006. "Off-Shoring of Business Services and Deindustrialization: Threat or Opportunity - and for Whom?," CEPR Discussion Papers 5617, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Nana Bourtchouladze, 2007. "Offshoring and Heterogeneous Firms: One Job Offshored, One Job Lost?," HEI Working Papers 28-2007, Economics Section, The Graduate Institute of International Studies, revised Dec 2007. [Downloadable!]
  3. Ingo Geishecker & Holger Görg, 2008. "Services offshoring and wages: Evidence from micro data," Kiel Working Papers 1434, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  4. Rosario Crinò, 2009. "Service Offshoring and White-Collar Employment," UFAE and IAE Working Papers 775.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
    Other versions:
  5. William Milberg and Deborah Winkler, 2009. "Economic Insecurity in the New Wave of Globalization," SCEPA Working Papers 2009-6, Schwartz Center for Economic Policy Analysis (SCEPA), The New School. [Downloadable!]
  6. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Task Trade between Similar Countries," NBER Working Papers 14554, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Holger Görg & Aoife Hanley, 2008. "Services Outsourcing and Innovation: An empirical investigation," Kiel Working Papers 1417, Kiel Institute for the World Economy. [Downloadable!]
  8. Andersson, Linda & Karpaty, Patrik, 2007. "Offshoring and Relative Labor Demand in Swedish Firms," Working Papers 2007:5, Örebro University, Swedish Business School. [Downloadable!]
  9. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2008. "Can Deunionization Lead to International Outsourcing?," CEPR Discussion Papers 6998, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Daniel Horgos, 2007. "Labor Market Effects of International Outsourcing: How Measurement Matters," SOEPpapers 58, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
  11. Mary Amiti & Shang-Jin Wei, 2006. "Service Offshoring and Productivity: Evidence from the United States," NBER Working Papers 11926, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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