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Multi-product offshoring

Listed author(s):
  • Eckel, Carsten
  • Irlacher, Michael

We show that the labor market effects of production line relocations within multi-product firms differ significantly from the relocation of production tasks within single-product firms. By incorporating offshoring of labor-intensive goods in a model with multi-product firms, and exploring its implications in partial and general equilibrium, we identify the cannibalization effect of offshoring as an important transmission mechanism within multi-product firms and show that this effect hits domestic labor demand in addition to the well-known relocation effect. Furthermore, we contribute to the growing literature on multi-product firms and trade by showing that lower offshoring costs tend to increase the range of products produced.

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File URL: http://www.sciencedirect.com/science/article/pii/S0014292117300314
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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 94 (2017)
Issue (Month): C ()
Pages: 71-89

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Handle: RePEc:eee:eecrev:v:94:y:2017:i:c:p:71-89
DOI: 10.1016/j.euroecorev.2017.02.006
Contact details of provider: Web page: http://www.elsevier.com/locate/eer

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