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Service Offshoring, Productivity, and Employment: Evidence from the United States

  • Mary Amiti
  • Shang-Jin Wei

This paper estimates the effects of offshoring on productivity in U.S. manufacturing industries between 1992 and 2000, using instrumental variables estimation to address the potential endogeneity of offshoring. It finds that service offshoring has a significant positive effect on productivity in the US, accounting for around 11 percent of productivity growth during this period. Offshoring material inputs also has a positive effect on productivity, but the magnitude is smaller accounting for approximately 5 percent of productivity growth. There is a small negative effect of less than half a percent on employment when industries are finely disaggregated (450 manufacturing industries). However, this affect disappears at more aggregate industry level of 96 industries indicating that there is sufficient growth in demand in other industries within these broadly defined classifications to offset any negative effects.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/238.

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Length: 39
Date of creation: 01 Dec 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/238
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  1. Pol Antràs & Elhanan Helpman, 2003. "Global Sourcing," NBER Working Papers 10082, National Bureau of Economic Research, Inc.
  2. Sourafel Girma & Holger Görg, 2003. "Outsourcing, Foreign Ownership and Productivity: Evidence from UK Establishment Level Data," Discussion Papers of DIW Berlin 361, DIW Berlin, German Institute for Economic Research.
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  8. Isabel Grilo & Tito Cordella, 1998. "“Globalization†and Relocation in a Vertically Differentiated Industry," IMF Working Papers 98/48, International Monetary Fund.
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  21. Caroline Freund & Diana Weinhold, 2002. "The Internet and International Trade in Services," American Economic Review, American Economic Association, vol. 92(2), pages 236-240, May.
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