Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor Share

Fatih Guvenen, Raymond J. Mataloni, Jr., Dylan G. Rassier and Kim Ruhl

No 23324, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show how offshore profit shifting by U.S. multinational enterprises affects several key measures of the U.S. economy. Profits shifted out of the United States grew rapidly from the mid-1990s to 2010 and have since waned. From 1982–2016, on average, 38 percent of income attributed to U.S. direct investment abroad is reattributable to the United States. We find that adjusting for profit shifting shrinks the trade deficit, decreases the return on U.S. foreign direct investment abroad, boosts productivity growth rates in the late 1990s and early 2000s, and lowers labor’s share of income.

JEL-codes: E01 E24 F23 O4 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-eff, nep-int, nep-mac and nep-tid
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Citations: View citations in EconPapers (40)

Published as Fatih Guvenen & Raymond J. Mataloni & Dylan G. Rassier & Kim J. Ruhl, 2022. "Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor Share," American Economic Review, vol 112(6), pages 1848-1884.

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