Offshoring and the Decline of Unions

Offshoring can reduce unionization rates by changing the composition of domestic employment or by eroding the union's bargaining power and thus decreasing the benefits of membership. Using an employeremployee matched data set we measure the exogenous threat of offshoring at the firm-level and union decisions of individual workers. Findings show that the threat of offshoring reduces unionization rates, even within a job-spell. This is not simply due to the changing composition of industries, firms, or workers, but is consistent with a decline in the union's bargaining position. Additional results confirm that the union-wagepremium and the rent-sharing elasticity are both smaller at offshoring firms.