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Does offshoring reduce industry employment?

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  • Alexander Hijzen
  • Paul Swaim

Abstract

This paper looks at the implications of offshoring for industry employment whilst explicitly accounting for the scale and technology effects of offshoring. The effects of offshoring on employment are analysed using industry-level data for 17 high income OECD countries. Our findings indicate that offshoring has no effect or a slight positive effect on sectoral employment. Offshoring within the same industry (“intra-industry offshoring”) reduces the labour-intensity of production, but does not affect overall industry employment. Inter-industry offshoring does not affect labour-intensity, but may have a positive effect on overall industry employment. These findings suggest that the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production sites.

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  • Alexander Hijzen & Paul Swaim, "undated". "Does offshoring reduce industry employment?," Discussion Papers 07/24, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:07/24
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    Cited by:

    1. Hijzen, Alexander & Swaim, Paul, 2010. "Offshoring, labour market institutions and the elasticity of labour demand," European Economic Review, Elsevier, vol. 54(8), pages 1016-1034, November.
    2. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2009. "Can deunionization lead to international outsourcing?," Journal of International Economics, Elsevier, vol. 77(1), pages 109-119, February.
    3. Neil Foster, 2012. "Offshoring and Labour Markets," FIW Specials series 003, FIW.
    4. Cédric Durand & Sébastien Miroudot, 2015. "Is labour the fall guy of a financial-led globalisation? A cross-country inquiry on globalisation, financialisation and employment at the industry level," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(3), pages 409-432, August.
    5. Ronald Bachmann & Sebastian Braun, 2011. "The Impact Of International Outsourcing On Labour Market Dynamics In Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(1), pages 1-28, February.
    6. Rosario Crinò, 2012. "Service Offshoring and the Skill Composition of Labour Demand," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(1), pages 20-57, February.
    7. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2015. "Offshoring and skilled-unskilled wage gap in selected EU countries (1995–2009)," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 39, pages 151-166.
    8. Neil Foster-McGregor & Johannes Poeschl & Robert Stehrer, 2016. "Offshoring and the Elasticity of Labour Demand," Open Economies Review, Springer, vol. 27(3), pages 515-540, July.
    9. Alessia Lo Turco & Aleksandra Parteka, 2009. "The EU enlargement and domestic employment," Economics Bulletin, AccessEcon, vol. 29(3), pages 2202-2217.
    10. Bramucci, Alessandro, 2016. "Offshoring, employment and wages," IPE Working Papers 71/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    11. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2015. "Integrated sectors - diversified earnings: the (missing) impact of offshoring on wages and wage convergence in the EU27," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(3), pages 325-350, September.
    12. Alessandro Bramucci, 2015. "Offshoring, Employment and Wages," Working Papers 1506, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2015.
    13. Keun Lee & Moosup Jung, 2015. "Overseas factories, domestic employment, and technological hollowing out: a case study of Samsung’s mobile phone business," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(3), pages 461-475, August.
    14. Deschryvere, Matthias & Kotiranta, Annu, 2008. "Domestic Employment Effects of Offshoring: Empirical Evidence from Finland," Discussion Papers 1166, The Research Institute of the Finnish Economy.
    15. Ďurčová, Júlia & Mirdala, Rajmund, 2017. "Tracing Value Added and Job Creation across Industries in the Slovak Republic," MPRA Paper 82862, University Library of Munich, Germany.
    16. Nana Bourtchouladze, 2007. "Offshoring and Heterogeneous Firms: One Job Offshored, One Job Lost?," IHEID Working Papers 28-2007, Economics Section, The Graduate Institute of International Studies, revised Dec 2007.
    17. Marek Gora & Piotr Lewandowski & Maciej Lis, 2017. "Temporary employment boom in Poland – a job quality vs. quantity trade-off?," IBS Working Papers 04/2017, Instytut Badan Strukturalnych.
    18. Anna M. Falzoni & Lucia Tajoli, 2011. "Offshoring and the Skill Composition of Employment in the Italian Manufacturing Industries," Rivista di Politica Economica, SIPI Spa, issue 1, pages 121-153, January-M.
    19. Lorena D’Agostino, 2015. "The neglected effects of R&D captive offshoring in emerging countries on the creation of knowledge at home," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 61-91, March.
    20. Neil Foster-McGregor & Mario Holzner & Michael Landesmann & Johannes Pöschl & Robert Stehrer & Roman Stöllinger, 2013. "A ‘Manufacturing Imperative’ in the EU – Europe's Position in Global Manufacturing and the Role of Industrial Policy," wiiw Research Reports 391, The Vienna Institute for International Economic Studies, wiiw.
    21. Mitra, Arup., 2013. "Can industry be the key to pro-poor growth? : An exploratory analysis for India," ILO Working Papers 994843463402676, International Labour Organization.
    22. repec:kap:empiri:v:45:y:2018:i:1:d:10.1007_s10663-016-9352-4 is not listed on IDEAS
    23. repec:ilo:ilowps:484346 is not listed on IDEAS
    24. Joanna Wolszczak-Derlacz & Aleksandra Parteka, 2018. "The effects of offshoring to low-wage countries on domestic wages: a worldwide industrial analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(1), pages 129-163, February.

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    Keywords

    international outsourcing; labour demand;

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