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Offshoring and Immigrant Employment: Firm-level Theory and Evidence


  • Barba Navaretti, Giorgio
  • Bertola, Giuseppe
  • Sembenelli, Alessandro


We propose and solve a simple model of firm-level decisions to offshore production stages of lower skill intensity than that of activities that remain in the domestic location. In theory, offshoring is optimal only for the more productive among heterogeneous firms if it entails a fixed cost. In a large sample of Italian firms, offshoring - especially of intermediate production stages - is indeed more prevalent among firms that are larger and more productive, and is predicted by arguably relevant firm-level characteristics. We also document that offshoring decreases the share of unskilled employment in domestic production facilities as well as firms’ propensity to employ immigrant workers, and we discuss the possible determinants and policy implication of the latter finding.

Suggested Citation

  • Barba Navaretti, Giorgio & Bertola, Giuseppe & Sembenelli, Alessandro, 2008. "Offshoring and Immigrant Employment: Firm-level Theory and Evidence," CEPR Discussion Papers 6743, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6743

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    References listed on IDEAS

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    2. F. Daveri & C. Jona-Lasinio, 2007. "Off-shoring and productivity growth in the Italian manufacturing industries," Economics Department Working Papers 2007-EP08, Department of Economics, Parma University (Italy).
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    8. Ottaviano, Gianmarco & Peri, Giovanni, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the US," CEPR Discussion Papers 5226, C.E.P.R. Discussion Papers.
    9. Giovanni Peri & Chad Sparber, 2007. "Task Specialization, Comparative Advantages, and the Effects of Immigration on Wages," NBER Working Papers 13389, National Bureau of Economic Research, Inc.
    10. Gianmarco I. P. Ottaviano & Giovanni Peri, 2016. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 2, pages 35-80 World Scientific Publishing Co. Pte. Ltd..
    11. Maurice Kugler & Hillel Rapoport, 2005. "Skilled Emigration, Business Networks and Foreign Direct Investment," CESifo Working Paper Series 1455, CESifo Group Munich.
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    Cited by:

    1. Gianmarco I. P. Ottaviano & Giovanni Peri & Greg C. Wright, 2016. "Immigration, Offshoring, and American Jobs," World Scientific Book Chapters,in: The Economics of International Migration, chapter 4, pages 117-151 World Scientific Publishing Co. Pte. Ltd..
    2. Adolfo Barajas & Ralph Chami & Dalia Hakura & Peter Montiel, 2011. "Workers’ Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Spring 20), pages 45-99, January.
    3. Andrea F. Presbitero & Matteo G. Richiardi & Alessia A. Amighini, 2015. "Is labor flexibility a substitute to offshoring? Evidence from Italian manufacturing," International Economics, CEPII research center, issue 142, pages 81-93.
    4. Marina Murat & Barbara Pistoresi & Alberto Rinaldi, 2008. "Italian Diaspora and Foreign Direct Investment: A Cliometric Perspective," Center for Economic Research (RECent) 013, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".

    More about this item


    Foreign Direct Investment; Migration; Outsourcing; Skilled Labour;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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