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Task trade and employment patterns: The offshoring and onshoring of Brazilian firms

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  • Philipp Ehrl

Abstract

The present paper tackles the question whether firms in a middle-wage country offshore production to save labor costs or if they onshore tasks that were offshored from high-wage countries. To distinguish which is the empirically more relevant case, I analyze the effect of importing intermediate inputs on the labor composition using matched employer–employee data and information on trade transactions from the universe of Brazilian firms. Propensity score matching indicates that an intermediate import expansion at the extensive margin leads to employment growth, higher intensities in routine and non-routine manual tasks and an increased share of intermediates exports. These findings thus point out that Brazil's intermediate imports predominantly represent onshored tasks. This result holds regardless of whether intermediate imports from high- or low-wage countries are considered. In line with theoretical considerations, the data show that Brazil's comparative advantage is in medium-complex and routine manual intensive production stages.

Suggested Citation

  • Philipp Ehrl, 2018. "Task trade and employment patterns: The offshoring and onshoring of Brazilian firms," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(3), pages 235-266, April.
  • Handle: RePEc:taf:jitecd:v:27:y:2018:i:3:p:235-266
    DOI: 10.1080/09638199.2017.1362462
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    Cited by:

    1. Wright, Greg C., 2014. "Revisiting the employment impact of offshoring," European Economic Review, Elsevier, vol. 66(C), pages 63-83.
    2. Ehrl, Philipp & Monteiro Monasterio, Leonardo, 2016. "Historical trades, skills and agglomeration economies," MPRA Paper 69829, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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