 Revisiting the employment impact of offshoringGreg Wright () European Economic Review, 2014, vol. 66, issue C, 63-83 Abstract: The productivity gains due to offshoring may, in part, accrue to workers. This paper estimates the magnitude of these gains and compares it to the magnitude of employment loss due to worker displacement. A model based on the production task framework from Grossman and Rossi-Hansberg (2008) is used to demonstrate that the effect of offshoring depends on the intensity of use of these tasks and, ultimately, impacts domestic employment through three channels: a direct displacement effect, which negatively impacts employment; an output effect generated by the productivity gains from offshoring, which reorganizes and increases aggregate production in the economy and impacts domestic employment positively; and a substitution effect among factors and tasks, which has an ambiguous effect. Using the model's structure as a roadmap and applying it to detailed U.S. manufacturing sector data over 2001–2007, results from GMM 3SLS regressions provide overall support for the structure and predictions of the tasks model of offshoring. In particular, the economic magnitude of the productivity gains is found to have been important. Keywords: Tasks offshoring; Offshoring and employment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:66:y:2014:i:c:p:63-83 DOI: 10.1016/j.euroecorev.2013.11.008 Access Statistics for this article European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer More articles in European Economic Review from Elsevier |
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