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Gains from Offshoring? Evidence from U.S. Microdata

Author

Listed:
  • Ryan Monarch
  • Jooyoun Park
  • Jagadeesh Sivadasan

Abstract

We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to micro-data from the U.S. Census Bureau. We exploit this data to assess how offshoring impacts domestic firm-level aggregate employment, output, wages and productivity. A class of models predicts that more productive firms engage in offshoring, and that this leads to gains in output and (measured) productivity, and potential gains in employment and wages, in the remaining domestic activities of the offshoring firm. Consistent with these models, we find that offshoring firms are on average larger and more productive compared to non-offshorers. However, we find that offshorers suffer from a large decline in employment (32 per cent) and output (28 per cent) relative to their peers even in the long run. Further, we find no significant change in average wages or in total factor productivity measures at affected firms. We find these results robust to a variety of checks. Thus we find no evidence for positive spillovers to the remaining domestic activity of firms in this large sampleof offshoring events.

Suggested Citation

  • Ryan Monarch & Jooyoun Park & Jagadeesh Sivadasan, 2013. "Gains from Offshoring? Evidence from U.S. Microdata," Working Papers 13-20, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:13-20
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    References listed on IDEAS

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    Cited by:

    1. Hartmut Egger & Udo Kreickemeier & Jens Wrona, 2017. "Offshoring Domestic Jobs," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 2, pages 27-70 World Scientific Publishing Co. Pte. Ltd..
    2. Nitya Pandalai Nayar & Aaron Flaaen & Christoph Boehm, 2016. "Multinationals, Offshoring and the Decline of U.S. Manufacturing," 2016 Meeting Papers 584, Society for Economic Dynamics.
    3. Priya Ranjan, 2014. "Globalization, Jobs, and Welfare: The Roles of Social Protection and Redistribution," Working Papers 141507, University of California-Irvine, Department of Economics.
    4. Monarch, Ryan & Park, Jooyoun & Sivadasan, Jagadeesh, 2017. "Domestic gains from offshoring? Evidence from TAA-linked U.S. microdata," Journal of International Economics, Elsevier, vol. 105(C), pages 150-173.
    5. Kondo, Illenin O., 2013. "Trade Reforms, Foreign Competition, and Labor Market Adjustments in the U.S," International Finance Discussion Papers 1095, Board of Governors of the Federal Reserve System (U.S.).
    6. Nicholas Sly & Lindsay Oldenski & Brian Kovak, 2017. "The Labor Market Effects of Offshoring by U.S. Multinational Firms: Evidence from Changes in Global Tax Policies," 2017 Meeting Papers 535, Society for Economic Dynamics.

    More about this item

    Keywords

    Outsourcing; employment; trade; productivity; firm performance;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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