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Offshoring, Exporting, and Jobs

Author

Listed:
  • Jose Luis Groizard

    (Department of Economics, Universitat de les Illes Balears)

  • Priya Ranjan

    (Department of Economics, University of California-Irvine)

  • Jose Antonio Rodriguez-Lopez

    (Department of Economics, University of California-Irvine)

Abstract

We construct a heterogeneous-firm model with a continuum of inputs to study the impact of offshoring on job flows at both the intensive and extensive margins. We identify three channels through which a reduction in the cost of offshoring affects firm-level employment: a job-relocation effect, a productivity effect, and a competition effect. Whether there is net job creation or job destruction crucially depends on the elasticity of substitution between inputs: the greater the elasticity, the more likely it is that offshoring causes overall job destruction. When firms are allowed to export, a reduction in the cost of offshoring makes offshoring firms more productive in the export market, which leads to further job creation. This offshoring-induced job creation due to exporting possibilities increases the likelihood that the overall effect of offshoring on industry employment is positive.

Suggested Citation

  • Jose Luis Groizard & Priya Ranjan & Jose Antonio Rodriguez-Lopez, 2013. "Offshoring, Exporting, and Jobs," Working Papers 121312, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:121312
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    Cited by:

    1. Groizard, Jose L. & Ranjan, Priya & Rodriguez-Lopez, Antonio, 2014. "Offshoring and jobs: The myriad channels of influence," European Economic Review, Elsevier, vol. 72(C), pages 221-239.
    2. Jose L. Groizard & Priya Ranjan & Antonio Rodriguez‐Lopez, 2015. "Trade Costs And Job Flows: Evidence From Establishment‐Level Data," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 173-204, January.

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    More about this item

    Keywords

    Heterogeneous firms; Employment; Offshoring costs;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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