Offshoring and Firm Overlap

Hans-Joerg Schmerer (), Stella Capuano, Hartmut Egger () and Michael Koch

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: We set up a model of offshoring with heterogeneous producers that captures two empirical regularities on offshoring firms: larger, more productive firms are more likely to make use of the offshoring opportunity; the fraction of firms that engages in offshoring is positive and smaller than one in any size or revenue category. These patterns generate an overlap of offshoring and non-offshoring firms, which is non-monotonic in the costs of offshoring. In an empirical exercise, we employ firm-level data from Germany to estimate key parameters of the model. We show that ignoring the overlap leads to a severe downward bias in the estimated gains from offshoring, which amounts to almost 60 percent in our model.

JEL-codes: F10 F12 F16 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec and nep-int
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Related works:
Working Paper: Offshoring and Firm Overlap (2017)
Working Paper: Offshoring and firm overlap (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:113147

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