Offshoring and skill-upgrading in French manufacturing

Juan Carluccio, Alejandro Cunat, Harald Fadinger and Christian Fons-Rosen

Journal of International Economics, 2019, vol. 118, issue C, 138-159

Abstract: Using French manufacturing firm-level data for the years 1996–2007, we uncover a novel set of stylized facts about offshoring behavior: (i) Low-productivity firms (“non-importers”) obtain most of their inputs domestically. (ii) Medium-productivity firms offshore skill-intensive inputs to skill-abundant countries and are more labor intensive in their domestic production than non-importers. (iii) Higher-productivity firms additionally offshore labor-intensive inputs to labor-abundant countries and are more skill intensive than non-importers. We develop a model in which heterogeneous firms, subject to fixed costs, can offshore intermediate inputs of different skill intensities to countries with different skill abundance. This leads to endogenous within-industry variation in domestic skill intensities. We provide econometric evidence supporting the factor-proportions channel through which reductions in offshoring costs to labor-abundant countries have significantly increased firm-level skill intensities of French manufacturers.

Keywords: Offshoring; Heterogeneous firms; Firm-level factor intensities; Skill upgrading Heckscher-Ohlin (search for similar items in EconPapers)
JEL-codes: F11 F12 F14 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Working Paper: Offshoring and Skill-upgrading in French Manufacturing (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:118:y:2019:i:c:p:138-159

DOI: 10.1016/j.jinteco.2019.01.001

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