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Immigration, Offshoring and American Jobs

  • Gianmarco I. P. Ottaviano
  • Giovanni Peri
  • Greg C. Wright

How do offshoring and immigration affect the employment of native workers? What kinds of jobs suffer, or benefit, most from the competition created by offshore and immigrant workers? In contrast to the existing literature that has mostly looked at the effects of offshoring and immigration separately, we argue that one can gain useful insights by jointly investigating the interactions among native, immigrant and offshore workers. We develop our argument in three steps. First, we present some new facts on 58 U.S. manufacturing industries from 2000 to 2007. Second, we build on Grossman and Rossi-Hansberg (2008) to design a model of task assignment among heterogeneous native, immigrant and offshore workers that fits those facts. Third, we use the model to draw systematic predictions about the effects of immigration and offshoring on native workers and we test these predictions on the data. We find that, within the manufacturing sector, immigrants do not compete much with natives, as these two groups of workers are relatively specialized in tasks at opposite ends of the skill intensity spectrum. Offshore workers, on the other hand, seem to be specialized in tasks of intermediate skill intensity. We also find that offshoring has no effect on native employment in the aggregate, while the effect of immigration on native employment is positive. This hints at the presence of a "productivity effect" whereby offshoring and immigration improve industry efficiency, thereby creating new jobs.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1147.

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Date of creation: May 2012
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Handle: RePEc:cep:cepdps:dp1147
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Becker, Sascha O. & Ekholm, Karolina & Muendler, Marc-Andreas, 2013. "Offshoring and the onshore composition of tasks and skills," Journal of International Economics, Elsevier, vol. 90(1), pages 91-106.
  2. Jonathan Vogel & Arnaud Costinot, 2008. "Matching and Inequality in the World Economy," 2008 Meeting Papers 879, Society for Economic Dynamics.
  3. Ottaviano, Gianmarco & Peri, Giovanni, 2008. "Immigration and National Wages: Clarifying the Theory and the Empirics," CEPR Discussion Papers 6916, C.E.P.R. Discussion Papers.
  4. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
  5. Emily Blanchard & Gerald Willmann, 2013. "Trade, Education, and The Shrinking Middle Class," Kiel Working Papers 1831, Kiel Institute for the World Economy.
  6. Chiswick, Barry R. & Lee, Yew Liang & Miller, Paul W., 2005. "Immigrant Earnings: A Longitudinal Analysis," IZA Discussion Papers 1750, Institute for the Study of Labor (IZA).
  7. Pol Antràs & Luis Garicano & Esteban Rossi-Hansberg, 2006. "Offshoring in a Knowledge Economy," The Quarterly Journal of Economics, MIT Press, vol. 121(1), pages 31-77, 02.
  8. Alan Manning, 2004. "We Can Work It Out: The Impact of Technological Change on the Demand for Low-Skill Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(5), pages 581-608, November.
  9. Gianmarco I. P. Ottaviano & Giovanni Peri & Greg C. Wright, 2012. "Immigration, Offshoring and American Jobs," CEP Discussion Papers dp1147, Centre for Economic Performance, LSE.
  10. Giovanni Peri & Chad Sparber, 2008. "Task Specialisation, Immigration and Wages," Development Working Papers 252, Centro Studi Luca d\'Agliano, University of Milano.
  11. Pol Antràs, 2003. "Firms, Contracts, and Trade Structure," NBER Working Papers 9740, National Bureau of Economic Research, Inc.
  12. Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2014. "Estimating the Impact of Trade and Offshoring on American Workers using the Current Population Surveys," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 581-595, October.
  13. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact Of Outsourcing And High-Technology Capital On Wages: Estimates For The United States, 1979-1990," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 907-940, August.
  14. Adolfo Barajas & Ralph Chami & Dalia Hakura & Peter Montiel, 2010. "Workers' Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence," Center for Development Economics 2010-02, Department of Economics, Williams College.
  15. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc.
  16. 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).
  17. Giorgio Barba Navaretti & Giuseppe Bertola & Alessandro Sembenelli, 2008. "Offshoring and Immigrant Employment: Firm-level Theory and Evidence," Development Working Papers 245, Centro Studi Luca d\'Agliano, University of Milano.
  18. Ann Harrison & Margaret McMillan, 2009. "Offshoring Jobs? Multinationals and US Manufacturing Employment," Discussion Papers Series, Department of Economics, Tufts University 0741, Department of Economics, Tufts University.
  19. Franziska Ohnsorge & Daniel Trefler, 2004. "Sorting It Out: International Trade and Protection With Heterogeneous Workers," NBER Working Papers 10959, National Bureau of Economic Research, Inc.
  20. Andri Chassamboulli & Theodore Palivos, 2010. "“Give me your Tired, your Poor,” so I can Prosper: Immigration in Search Equilibrium," University of Cyprus Working Papers in Economics 12-2010, University of Cyprus Department of Economics.
  21. Kristin F. Butcher & John DiNardo, 1998. "The Immigrant and Native-born Wage Distributions: Evidence from United States Censuses," NBER Working Papers 6630, National Bureau of Economic Research, Inc.
  22. William W. Olney, 2012. "Offshoring, immigration, and the native wage distribution," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 830-856, August.
  23. Giovanni Peri, 2012. "The Effect Of Immigration On Productivity: Evidence From U.S. States," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 348-358, February.
  24. Monte, Ferdinando, 2009. "Skill Bias, Trade, and Wage Dispersion," MPRA Paper 14719, University Library of Munich, Germany.
  25. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc.
  26. Alan Manning, 2004. "We Can Work It Out: the Impact of Technological Change on the Demand for Low Skill Workers," CEP Discussion Papers dp0640, Centre for Economic Performance, LSE.
  27. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
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