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Dispelling Some Myths About Offshoring

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  • Harrison, Ann E.
  • McMillan, Margaret S.

Abstract

Critics of globalization claim that firms are being driven to shift employment abroad by the prospects of cheaper labor. Yet the evidence for this, beyond anecdotes, is slim. In this article, we review evidence on whether firms that do business in foreign countries are substituting foreign for domestic labor. We review the results of previous studies and present new firm-level evidence showing that, in fact, increases in employment in low-income countries do hurt employment at home. The premise that foreign expansion of U.S. multinationals encourages employment at home is a myth, but the domestic employment costs of offshoring are probably fairly small in magnitude.

Suggested Citation

  • Harrison, Ann E. & McMillan, Margaret S., 2006. "Dispelling Some Myths About Offshoring," MPRA Paper 15615, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:15615
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    References listed on IDEAS

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    Cited by:

    1. Thomas Kemeny & David Rigby & Abigail Cooke, 2015. "Cheap Imports and the Loss of US Manufacturing Jobs," The World Economy, Wiley Blackwell, vol. 38(10), pages 1555-1573, October.
    2. Alastaire Sèna ALINSATO, 2015. "Globalization, Poverty And Role Of Infrastructures," Journal of Economics and Political Economy, KSP Journals, vol. 2(1s), pages 197-212, May.
    3. J.K. Mullen & Martin Williams, 2012. "Captive offshoring by US multinationals: measuring the domestic employment impacts of vertical FDI," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 21-34.
    4. Martina Musteen & Mujtaba Ahsan & Taekyung Park, 2017. "SMEs, Intellectual Capital, and Offshoring of Service Activities: An Empirical Investigation," Management International Review, Springer, vol. 57(4), pages 603-630, August.
    5. Leo McCann, 2014. "Disconnected Amid the Networks and Chains: Employee Detachment from Company and Union after Offshoring," British Journal of Industrial Relations, London School of Economics, vol. 52(2), pages 237-260, June.

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    More about this item

    Keywords

    Outsourcing; globalization; foreign labor; domestic labor; multinationals;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M55 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Contracting Devices

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