Multinationals Offshoring, and the Decline of U.S. Manufacturing

Christoph Boehm, Aaron Flaaen and Nitya Pandalai-Nayar

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We provide three new stylized facts that characterize the role of multinationals in the U.S. manufacturing employment decline, using a novel microdata panel from 1993-2011 that augments U.S. Census data with firm ownership information and transaction-level trade. First, over this period, U.S. multinationals accounted for 41% of the aggregate manufacturing decline, disproportionate to their employment share in the sector. Second, U.S. multinational-owned establishments had lower employment growth rates than a narrowly-defined control group. Third, establishments that became part of a multinational experienced job losses, accompanied by increased foreign sourcing of intermediates by the parent firm. To establish whether imported intermediates are substitutes or complements for U.S. employment, we develop a model of input sourcing and show that the employment impact of foreign sourcing depends on a key elasticity of firm size to production efficiency. Structural estimation of this elasticity finds that imported intermediates substitute for U.S. employment. In general equilibrium, our estimates imply a sizable manufacturing employment decline of 13%.

Keywords: Multinational Firms; Offshoring; Outsourcing; Manufacturing Employment (search for similar items in EconPapers)
JEL-codes: F14 F16 F23 (search for similar items in EconPapers)
Pages: 84 pages
Date: 2017-01
New Economics Papers: this item is included in nep-int and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://www2.census.gov/ces/wp/2017/CES-WP-17-22.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: Multinationals, Offshoring, and the Decline of U.S. Manufacturing (2020)
Working Paper: Multinationals, Offshoring and the Decline of U.S. Manufacturing (2019)
Working Paper: Multinationals, Offshoring and the Decline of U.S. Manufacturing (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:17-22

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