Offshoring and Skill-upgrading in French Manufacturing

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

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

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 signicantly 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)
Pages: 49
Date: 2018-05
New Economics Papers: this item is included in nep-eur and nep-int
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Journal Article: Offshoring and skill-upgrading in French manufacturing (2019)
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