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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. 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.
  2. 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).
  3. 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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  7. 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.
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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. Malchow-Møller, Nikolaj & Munch, Jakob R. & Seidelin, Claus Aastrup & Skaksen, Jan Rose, 2013. "Immigrant Workers and Farm Performance: Evidence from Matched Employer-Employee Data," IZA Discussion Papers 7133, Institute for the Study of Labor (IZA).
  2. 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.
  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. Ghani, Ejaz & Kerr, William R. & Stanton, Christopher, 2013. "Diasporas and outsourcing : evidence from oDesk and India," Policy Research Working Paper Series 6403, The World Bank.
  5. Colantone, Italo & Crinò, Rosario, 2014. "New imported inputs, new domestic products," Journal of International Economics, Elsevier, vol. 92(1), pages 147-165.
  6. Wright, Greg C., 2014. "Revisiting the employment impact of offshoring," European Economic Review, Elsevier, vol. 66(C), pages 63-83.
  7. 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).
  8. 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.
  9. E. Podrecca & G. Rossini, 2012. "Wages and international factors’ mobility," Working Papers wp826, Dipartimento Scienze Economiche, Universita' di Bologna.
  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. 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.
  13. 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.
  14. 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.

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