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Immigration, Offshoring and American Jobs

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  • Gianmarco I.P. Ottaviano

    (Università Bocconi, CEPR, FEEM and LdA)

  • Giovanni Peri

    (University of California, Davis, NBER and LdA)

  • Greg C. Wright

    (University of California, Davis)

Abstract

How many "American jobs" have U.S.-born workers lost due to immigration and offshoring? Or, alternatively, is it possible that immigration and offshoring, by promoting cost-savings and enhanced efficiency in firms, have spurred the creation of jobs for U.S. natives? We consider a multi-sector version of the Grossman and Rossi-Hansberg (2008) model with a continuum of tasks in each sector and we augment it to include immigrants with heterogeneous productivity in tasks. We use this model to jointly analyze the impact of a reduction in the costs of offshoring and of the costs of immigrating to the U.S. The model predicts that while cheaper offshoring reduces the share of natives among less skilled workers, cheaper immigration does not, but rather reduces the share of offshored jobs instead. Moreover, since both phenomena have a positive "cost-savings" effect they may leave unaffected, or even increase, total native employment of less skilled workers. Our model also predicts that offshoring will push natives toward jobs that are more intensive in communication-interactive skills and away from those that are manual and routine intensive. We test the predictions of the model on data for 58 U.S. manufacturing industries over the period 2000-2007 and find evidence in favor of a positive productivity effect such that immigration has a positive net effect on native employment while offshoring has no effect on it. We also find some evidence that offshoring has pushed natives toward more communication-intensive tasks while it has pushed immigrants away from them.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.145.

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Date of creation: Nov 2010
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Handle: RePEc:fem:femwpa:2010.145

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Keywords: Employment; Production tasks; Immigrants; Offshoring;

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References

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  1. Antecol, Heather & Cobb-Clark, Deborah A. & Trejo, Stephen, 2001. "Immigration Policy and the Skills of Immigrants to Australia, Canada, and the United States," IZA Discussion Papers 363, Institute for the Study of Labor (IZA).
  2. Jonathan Vogel & Arnaud Costinot, 2008. "Matching and Inequality in the World Economy," 2008 Meeting Papers 879, Society for Economic Dynamics.
  3. 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.
  4. Sascha O. Becker & Karolina Ekholm & Marc-Andreas Muendler, 2009. "Offshoring and the Onshore Composition of Tasks and Skills," IAW Discussion Papers 55, Institut für Angewandte Wirtschaftsforschung (IAW).
  5. Giovanni Peri & Chad Sparber, 2009. "Task Specialization, Immigration and Wages," Working Papers 91, University of California, Davis, Department of Economics.
  6. Ann Harrison & Margaret McMillan, 2009. "Offshoring Jobs? Multinationals and US Manufacturing Employment," Discussion Papers Series, Department of Economics, Tufts University 0741, Department of Economics, Tufts University.
  7. Pol Antràs, 2003. "Firms, Contracts, and Trade Structure," NBER Working Papers 9740, National Bureau of Economic Research, Inc.
  8. Barry R. Chiswick & Yew Liang Lee & Paul W. Miller, 2005. "Immigrant Earnings: A Longitudinal Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 485-503, December.
  9. 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.
  10. Kristin F. Butcher & John DiNardo, 2002. "The Immigrant and native-born wage distributions: Evidence from United States censuses," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(1), pages 97-121, October.
  11. Giorgio Barba Navaretti & Giuseppe Bertola & Alessandro Sembenelli, 2008. "Offshoring and Immigrant Employment: Firm-level Theory and Evidence," Development Working Papers 245, Centro Studi Luca d\'Agliano, University of Milano.
  12. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
  13. William W. Olney, 2008. "Offshoring, Immigration, and the Native Wage Distribution," Department of Economics Working Papers 2010-12, Department of Economics, Williams College, revised Feb 2011.
  14. Ebenstein, Avraham & Harrison, Ann & McMillan, Margaret & Phillips, Shannon, 2011. "Estimating the impact of trade and offshoring on American workers using the current population surveys," Policy Research Working Paper Series 5750, The World Bank.
  15. Franziska Ohnsorge & Daniel Trefler, 2004. "Sorting It Out: International Trade and Protection With Heterogeneous Workers," NBER Working Papers 10959, National Bureau of Economic Research, Inc.
  16. Monte, Ferdinando, 2009. "Skill Bias, Trade, and Wage Dispersion," MPRA Paper 14719, University Library of Munich, Germany.
  17. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-97, December.
  18. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
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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. E. Podrecca & G. Rossini, 2012. "Wages and international factors’ mobility," Working Papers wp826, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. 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.
  4. William W. Olney, 2008. "Offshoring, Immigration, and the Native Wage Distribution," Department of Economics Working Papers 2010-12, Department of Economics, Williams College, revised Feb 2011.
  5. Italo Colantone & Rosario Crinò, 2011. "New Imported Inputs, New Domestic Products," Development Working Papers 312, Centro Studi Luca d\'Agliano, University of Milano.
  6. Hugo Rojas-Romagosa, 2011. "Wage inequality in trade-in-tasks models," CPB Discussion Paper 196, CPB Netherlands Bureau for Economic Policy Analysis.
  7. 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.

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