Labor Market Effects of Offshoring Within and Across Firm Boundaries
Publication Date
1-1-2015
Grant Type
Early Career Research Award
Description
We use a model of endogenous offshoring activities to derive multi-tier 2SLS empirical strategy and estimate the impact of offshore hiring on US domestic employment outcomes. Our empirical strategy uses the implementation of bilateral tax treaties as instruments for industry-time-country specific offshoring activity. Exploiting administrative data for US multinational firms from the US Bureau of Economic Analysis spanning two decades, we find that greater offshore hiring increases employment within US parent firms due to productivity/scale effects, but has substantially less benefit for industry-wide employment as substitution effects observed across firms that alter their global organization of production offset the employment gains observed within existing US multinational firms. Our results indicate that greater offshore activity raises net employment by US firms modestly.
Grant Product
Kovak, Brian K., Lindsay Oldenski, and Nicholas Sly. 2017. "The Labor Market Effects of Offshoring by U.S. Multinational Firms: Evidence from Changes in Global Tax Policies." Federal Reserve Bank of Kansas City Research Working Paper No. RWP 17-12.
Kovak, Brian K., Lindsay Oldenski, and Nicholas Sly. 2019. "The Labor Market Effects of Offshoring by U.S. Multinational Firms." National Bureau of Economic Research Working Paper No. 23947. https://doi.org/10.3386/w23947
Kovak, Brian K., Lindsay Oldenski, and Nicholas Sly. 2019. "The Labor Market Effects of Offshoring by U.S. Multinational Firms." Review of Economics and Statistics 103(2): 381-396. https://doi.org/10.1162/rest_a_00878