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Service offshoring, Productivity, and Employment

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Author Info

  • Mary Amiti
  • Shang-Jin Wei

Abstract

This paper estimates the effects of offshoring on productivity in U.S. 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 percent 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 percent 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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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/238.

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Length: 39
Date of creation: 01 Dec 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/238

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Related research

Keywords: Employment; Productivity; Labor; Manufacturing sector; Economic models; Trade; equation; standard errors; instrumental variables; labor demand; equations; statistics; outliers; measurement error; statistic; effect on employment; employment equations; employment effects; autocorrelation; outlier; correlation; econometrics; services employment; standard deviations; explanatory power; employment equation; correlations; goodness of fit; skilled labor; effects on employment; survey; employment data; instrumental variable; stata; time series; employment effect; fixed effects model; empirical specification; multinational employment; employment shares; minimization; estimation technique; errors in variables;

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References

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  19. Ekholm, Karolina & Hakkala, Katariina, 2005. "The Effect of Offshoring on Labor Demand: Evidence from Sweden," Working Paper Series 654, Research Institute of Industrial Economics.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Job insecurity: who's to blame?
    by chris dillow in Stumbling and Mumbling on 2007-05-24 09:35:14
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