Offshoring and volatility: more evidence from Mexico's maquiladora industry

Roberto Coronado

No 1106, Working Papers from Federal Reserve Bank of Dallas

Abstract: In recent papers, Bergin, Feenstra, and Hanson (2007 and 2009, hereafter BFH) analyze the impact that offshoring has in employment and output volatility, particularly on the Mexican maquiladora industry. Their empirical results indicate that employment and output in the offshoring manufacturing plants in Mexico are more volatile than their counterparts in the U.S. Such empirical results suggest that the maquiladora industry (offshoring) can help the U.S. industrial sector to better absorb shocks. In this paper, I expand BFH's empirical analysis in different directions. The empirical results I provide here suggest that the volatility in employment and output in Mexico's maquiladoras is greater than the one estimated by BFH. Therefore, offshoring via the maquiladora industry in Mexico can act as a greater cushion for business cycle fluctuations in the U.S.

Keywords: Business cycles; International trade (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-bec and nep-mac
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Citations: View citations in EconPapers (2)

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