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Offshoring, Multinationals and Labor Market: A Review of the Empirical Literature

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  • Rosario Crinò

    (Università degli Studi di Milano - DEAS, Italy and CESPRI - Bocconi University, Milan, Italy.)

Abstract

This paper reviews the existing empirical literature on the effects of offshoring and foreign activities of Multinational Enterprises (MNEs) on the labor markets of developed countries. Avail-able results provide robust evidence in support of the fear that material offshoring worsens wage inequality between skilled and unskilled workers; on the contrary, results are still too ambiguous to support concerns that material offshoring raises the elasticity of unskilled labor demand and produces adverse short-run employment dynamics. Service offshoring does not reduce total labor demand significantly and does not pose serious threats to human capital accumulation. Finally, MNEs tend to substitute domestic labor with foreign labor, but the relationship is weak; moreover, substitutability is mainly driven by horizontal, market-seeking, Foreign Direct Investments.

Suggested Citation

  • Rosario Crinò, 2007. "Offshoring, Multinationals and Labor Market: A Review of the Empirical Literature," KITeS Working Papers 196, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jan 2007.
  • Handle: RePEc:cri:cespri:wp196
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    More about this item

    Keywords

    Offshoring; Multinational Enterprises; Labor Market.;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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