Gains from Offshoring? Evidence from U.S. Microdata

Ryan Monarch, Jooyoun Park and Jagadeesh Sivadasan

No 1124, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to confidential data on U.S. firm operations. We exploit these data to assess how offshoring affects domestic firm-level aggregate employment, output, wages and productivity. Consistent with heterogenous firm models where offshoring involves a fixed cost, we find that the average offshoring firm is larger and more productive than the average non-offshorer. After initiating offshoring, firms experience large declines in employment (46.2 per cent), output (38.5 per cent) and capital (28.8 per cent) relative to their industry peers. We find no significant change in average wages or in total factor productivity measures for offshoring firms. These results are consistent across two separate difference-in-differences (DID) approaches, an instrumental variables approach, and a number of robustness checks. Thus, we find offshoring to be a strong substitute for domestic activity in this large sample of offshoring events.

Keywords: Outsourcing; manufacturing; employment; trade; productivity; firm performance (search for similar items in EconPapers)
JEL-codes: F14 F16 F23 F61 F66 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2014-11-11
New Economics Papers: this item is included in nep-bec, nep-eff, nep-int and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.federalreserve.gov/econresdata/ifdp/2014/files/ifdp1124.pdf Full text (application/pdf)

Related works:
Working Paper: Gains from Offshoring? Evidence from U.S. Microdata (2013)
Working Paper: Gains from Offshoring? Evidence from U.S. Microdata (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1124

Access Statistics for this paper

More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().