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Gains from Offshoring? Evidence from U.S. Microdata

  • Monarch, Ryan

    (University of Michigan)

  • Park, Jooyoun

    (Kent State University)

  • Sivadasan, Jagadeesh

    (University of Michigan)

We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to micro-data from the U.S. Census Bureau. We exploit this data to assess how offshoring impacts domestic firm-level aggregate employment, output, wages and productivity. A class of models predicts that more productive firms engage in offshoring, and that this leads to gains in output and (measured) productivity, and potential gains in employment and wages, in the remaining domestic activities of the offshoring firm. Consistent with these models, we find that offshoring firms are on average larger and more productive compared to non-offshorers. However, we find that offshorers suffer from a large decline in employment (32 per cent) and output (28 per cent) relative to their peers even in the long run. Further, we find no signi cant change in average wages or in total factor productivity measures at affected firms. We find these results robust to a variety of checks. Thus we find no evidence for positive spillovers to the remaining domestic activity of firms in this large sample of offshoring events.

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File URL: http://www.fordschool.umich.edu/rsie/workingpapers/Papers626-650/r635.pdf
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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 635.

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Length: 51 pages
Date of creation: 21 Jan 2013
Date of revision:
Handle: RePEc:mie:wpaper:635
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