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Multinationals, Offshoring, and the Decline of U.S. Manufacturing

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  • Boehm, Christoph E.
  • Flaaen, Aaron
  • Pandalai-Nayar, Nitya

Abstract

We provide new facts about the role of multinationals in the decline in U.S. manufacturing employment between 1993 and 2011, using a novel microdata panel with firm-level ownership and trade information. Multinational-owned establishments displayed lower employment growth than a narrow control group and accounted for 41% of the aggregate decline. Newly multinational establishments experienced job losses, while their parent firms increased foreign input imports. We develop a model that rationalizes this behavior and bound a key elasticity with our microdata. The estimates imply that multinational offshoring was responsible for a sizable reduction in U.S. manufacturing employment.

Suggested Citation

  • Boehm, Christoph E. & Flaaen, Aaron & Pandalai-Nayar, Nitya, 2020. "Multinationals, Offshoring, and the Decline of U.S. Manufacturing," Journal of International Economics, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:inecon:v:127:y:2020:i:c:s0022199620301069
    DOI: 10.1016/j.jinteco.2020.103391
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    More about this item

    Keywords

    Multinational firms; Offshoring; Outsourcing; Manufacturing employment;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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