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Production Offshoring and the Skill Composition of Italian Manufacturing Firms: A Counterfactual Analysis

Author

Listed:
  • Roberto Antonietti

    (University of Padua)

  • Davide Antonioli

    (University of Ferrara)

Abstract

This work explores the effects of cross-border relocation of production on the skill composition of Italian manufacturing firms. Its aim is to assess if the firms’ strategy to offshore production activities towards cheap labor countries determines a bias in the relative employment of skilled versus unskilled workers. Using a balanced panel of firm-based data across the period 1995-2003, we test this skill-bias hypothesis by means of a counterfactual experiment in which we employ a difference-in-differences propensity score matching estimator in order to control for selectivity bias without relying on a specific functional form of the relations of interest. In line with the literature, our results point to confirm a general, although weak, skill bias effect of production offshoring on the labor-force composition of Italian manufacturing: in particular, we find that firms farming out production stages in 1998-2000 show an upward shift in the skill ratio with respect to the counterfactual of firms not moving their production abroad. However, when we look at the single components of the skill ratio, we find that the skill bias effect is primarily driven by a fall in the employment of production workers, while a weak or not significant effect is found with respect to the employment of skilled personnel.

Suggested Citation

  • Roberto Antonietti & Davide Antonioli, 2007. "Production Offshoring and the Skill Composition of Italian Manufacturing Firms: A Counterfactual Analysis," Working Papers 2007.97, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2007.97
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    References listed on IDEAS

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    1. Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-1797, November.
    2. Holger Görg & Aoife Hanley, 2004. "Does Outsourcing Increase Profitability?," The Economic and Social Review, Economic and Social Studies, vol. 35(3), pages 267-288.
    3. Giorgio Barba Navaretti & Enrico Santarelli & Marco Vivarelli, 2002. "The role of subsidies in promoting Italian joint ventures in least developed and transition economies," Applied Economics, Taylor & Francis Journals, vol. 34(12), pages 1563-1569.
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    Cited by:

    1. Colin Davis & Alireza Naghavi, 2011. "Offshoring Production: A Simple Model Of Wages, Productivity, And Growth," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 334-348, April.
    2. Crinò, Rosario, 2010. "Employment effects of service offshoring: Evidence from matched firms," Economics Letters, Elsevier, vol. 107(2), pages 253-256, May.

    More about this item

    Keywords

    Production Offshoring; Skill Bias; Difference-in-Differences; Propensity;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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