Offshoring, Exporting, and Jobs

José Groizard, Priya Ranjan () and Antonio Rodriguez-Lopez ()
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Priya Ranjan: Department of Economics, University of California-Irvine
Authors registered in the RePEc Author Service: Priyaranjan Jha

No 121312, Working Papers from University of California-Irvine, Department of Economics

Abstract: We construct a heterogeneous-firm model with a continuum of inputs to study the impact of offshoring on job flows at both the intensive and extensive margins. We identify three channels through which a reduction in the cost of offshoring affects firm-level employment: a job-relocation effect, a productivity effect, and a competition effect. Whether there is net job creation or job destruction crucially depends on the elasticity of substitution between inputs: the greater the elasticity, the more likely it is that offshoring causes overall job destruction. When firms are allowed to export, a reduction in the cost of offshoring makes offshoring firms more productive in the export market, which leads to further job creation. This offshoring-induced job creation due to exporting possibilities increases the likelihood that the overall effect of offshoring on industry employment is positive.

Keywords: Heterogeneous firms; Employment; Offshoring costs (search for similar items in EconPapers)
JEL-codes: F12 F16 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2013-04
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (2)

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Working Paper: Offshoring, Exporting, and Jobs (2013)
Working Paper: Offshoring, Exporting, and Jobs (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:irv:wpaper:121312

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