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Immigration, offshoring and American jobs

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  • Gianmarco I.P. Ottaviano

    ()
    (Universita’ Bocconi, Department of Economics
    CEPR
    Fondazione Eni Enrico Mattei (FEEM)
    Centro Studi Luca d’Agliano (LdA))

  • Giovanni Peri

    ()
    (University of California, Davis - Department of Economics
    NBER
    Centro Studi Luca d’Agliano (LdA))

  • Greg C. Wright

    ()
    (University of California, Davis - Department of Economics)

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 National Bank of Belgium in its series Working Paper Research with number 205.

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Length: 58 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:nbb:reswpp:201010-205

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Keywords: Employment; production tasks; immigrants; offshoring;

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References

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  1. Andri Chassamboulli & Theodore Palivos, 2010. "“Give me your Tired, your Poor,” so I can Prosper: Immigration in Search Equilibrium," University of Cyprus Working Papers in Economics 12-2010, University of Cyprus Department of Economics.
  2. Giovanni Peri & Chad Sparber, 2009. "Task Specialization, Immigration, and Wages," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 135-69, July.
  3. Pol Antras & Luis Garicano & Esteban Rossi-Hansberg, 2005. "Offshoring in a Knowledge Economy," Harvard Institute of Economic Research Working Papers 2067, Harvard - Institute of Economic Research.
  4. Kristin F. Butcher & John DiNardo, 1998. "The Immigrant and Native-born Wage Distributions: Evidence from United States Censuses," NBER Working Papers 6630, National Bureau of Economic Research, Inc.
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  7. 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).
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  17. Maarten Goos & Alan Manning, 2003. "Lousy and Lovely Jobs: the Rising Polarization of Work in Britain," CEP Discussion Papers dp0604, Centre for Economic Performance, LSE.
  18. Giovanni Peri, 2009. "The Effect of Immigration on Productivity: Evidence from US States," NBER Working Papers 15507, National Bureau of Economic Research, Inc.
  19. Adolfo Barajas & Ralph Chami & Dalia Hakura & Peter Montiel, 2010. "Workers' Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence," Center for Development Economics 2010-02, Department of Economics, Williams College.
  20. Emily Blanchard & Gerald Willmann, 2013. "Trade, Education, and the Shrinking Middle Class," CESifo Working Paper Series 4141, CESifo Group Munich.
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  23. 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.
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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
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Cited by:
  1. 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.
  2. Nikolaj Malchow-Møller & Jakob Roland Munch & Claus Aastrup Seidelin & Jan Rose Skaksen, 2013. "Immigrant Workers and Farm Performance: Evidence from Matched Employer-Employee Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 819-841.
  3. 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.
  4. 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.
  5. Heid, Benedikt & Larch, Mario, 2011. "Migration, trade and unemployment," Economics Discussion Papers 2011-45, Kiel Institute for the World Economy.
  6. E. Podrecca & G. Rossini, 2012. "Wages and international factors’ mobility," Working Papers wp826, Dipartimento Scienze Economiche, Universita' di Bologna.
  7. Italo Colantone & Rosario Crinò, 2011. "New Imported Inputs, New Domestic Products," Development Working Papers 312, Centro Studi Luca d\'Agliano, University of Milano.
  8. Mitaritonna, Cristina & Orefice, Gianluca & Peri, Giovanni, 2014. "Immigrants and Firms' Productivity: Evidence from France," IZA Discussion Papers 8063, Institute for the Study of Labor (IZA).
  9. 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.
  10. 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.
  11. Hugo Rojas-Romagosa, 2011. "Wage inequality in trade-in-tasks models," CPB Discussion Paper 196, CPB Netherlands Bureau for Economic Policy Analysis.
  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. 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.
  14. Wright, Greg C., 2014. "Revisiting the employment impact of offshoring," European Economic Review, Elsevier, vol. 66(C), pages 63-83.

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