Abstract
We address the mismatch between existing theoretical models and standard empirical practice in the analysis of the labor market effects of offshoring. While theory focuses on one-sector or two-sector models, empirical studies exploit variation in offshoring across a large number of industries, typically including a linear offshoring term in the analysis. Thereby, these studies implicitly assume a monotonic relationship and ignore general-equilibrium effects across industries. We analyze the effects of offshoring across a continuum of industries with different shares of offshorable tasks that are linked through labor and capital markets in general oligopolistic equilibrium (GOLE). Our main result is that offshoring generates a hump-shaped pattern of employment changes across industries. While the relocation effect reduces employment in offshoring-intensive industries, labor demand in industries with a high prevalence of domestic production falls because of rising domestic wages and firm exits in general equilibrium. In the empirical part, we test the non-monotonic employment effects of offshoring across industries by focusing on Germany after the fall of the Iron Curtain. We find strong empirical support for the hump shape in the changes of employment across industries with different scopes for offshoring, which is almost entirely due to the extensive margin, underscoring the importance of establishment entry and exit. Finally, we discuss important implications for empirical and theoretical research arising from our study.
Dokumententyp: | Paper |
---|---|
Keywords: | General oligopolistic equilibrium; Task offshoring; Offshoring and employment; Industry heterogeneity |
Fakultät: | Volkswirtschaft
Volkswirtschaft > Munich Discussion Papers in Economics |
Themengebiete: | 300 Sozialwissenschaften > 300 Sozialwissenschaft, Soziologie
300 Sozialwissenschaften > 330 Wirtschaft |
JEL Classification: | F12, F16, F23, J23, L13 |
URN: | urn:nbn:de:bvb:19-epub-43049-1 |
Sprache: | Englisch |
Dokumenten ID: | 43049 |
Datum der Veröffentlichung auf Open Access LMU: | 10. Apr. 2018, 07:11 |
Letzte Änderungen: | 05. Nov. 2020, 05:54 |
Literaturliste: | Acemoglu, Daron and David H. Autor, “Chapter 12 - Skills, tasks and technologies: Implications for employment and earnings,” in Orley Ashenfelter and David Card, eds., Handbook of Labor Economics, Vol. 4, Part B, Elsevier, 2011, pp. 1043–1171. Amiti, Mary and Shang-Jin Wei, “Fear of service outsourcing: Is it justified?,” Economic Policy, 2005, 20 (42), 307–347. _ and _ , “Service offshoring and productivity: Evidence from the United States,” Working Paper 11926, National Bureau of Economic Research January 2006. Antoni, Manfred, Andreas Ganzer, and Philipp vom Berge, “Sample of integrated labour market biographies (SIAB) 1975–2014,” FDZ data report 4 2016. Antràs, Pol and Elhanan Helpman, “Global sourcing,” Journal of Political Economy, 2004, 112 (3), 552–580. _ , Luis Garicano, and Esteban Rossi-Hansberg, “Offshoring in a knowledge economy,” Quarterly Journal of Economics, 2006, 121 (1), 31–77. Artuç, Erhan, Shubham Chaudhuri, and John McLaren, “Trade shocks and labor adjustment: A structural empirical approach,” American Economic Review, 2010, 100 (3), 1008–1045. Autor, David H., “The “task approach” to labor markets: An overview,” Journal for Labour Market Research, 2013, 46, 185–199. _ and David Dorn, “The growth of low-skill service jobs and the polarization of the US labor market,” American Economic Review, August 2013, 103 (5), 1553–97. _ , _ , and Gordon H. Hanson, “The China syndrome: Local labor market effects of import competition in the United States,” American Economic Review, 2013, 103 (6), 2121–2168. _ , _ , _ , and Jae Song, “Trade adjustment: Worker level evidence,” Quarterly Journal of Economics, 2014, 129 (4), 1799–1860. _ , Frank Levy, and Richard J. Murnane, “The skill content of recent technological change: An empirical exploration,” Quarterly Journal of Economics, 2003, 118 (4), 1279–1333. Bastos, Paulo and Udo Kreickemeier, “Unions, competition and international trade in general equilibrium,” Journal of International Economics, 2009, 79 (2), 238–247. Baumgarten, Daniel, Ingo Geishecker, and Holger Görg, “Offshoring, tasks, and the skill-wage pattern,” European Economic Review, 2013, 61, 132–152. Becker, Sascha O., Karolina Ekholm, and Marc-Andreas Muendler, “Offshoring and the onshore composition of tasks and skills,” Journal of International Economics, 2013, 90 (1), 91–106. Blanchard, Olivier and Francesco Giavazzi, “Macroeconomic effects of regulation and deregulation in goods and labor markets,” Quarterly Journal of Economics, 2003, 118 (3), 879–907. Blinder, Alan S., “Offshoring: The next industrial revolution?,” Foreign Affairs, 2006, pp. 113–128. _ and Alan B. Krueger, “Alternative measures of offshorability: A survey approach,” Journal of Labor Economics, 2013, 31 (S1), S97–S128. Brülhart, Marius, Céline Carrère, and Federico Trionfetti, “How wages and employment adjust to trade liberalization: Quasi-experimental evidence from Austria,” Journal of International Economics, 2012, 86 (1), 68–81. Burda, Michael C., “The determinants of East-West German migration: Some first results,” European Economic Review, 1993, 37 (2–3), 452–461. _ and Jennifer Hunt, “From reunification to economic integration: Productivity and the labor market in Eastern Germany,” Brookings Papers on Economic Activity, 2001, 2001 (2), 2–71. Burstein, Ariel and Jonathan Vogel, “International trade, technology, and the skill premium,” Journal of Political Economy, 2017, 125 (5), 1356–1412. Card, David, Jörg Heining, and Patrick Kline, “Workplace heterogeneity and the rise of West German wage inequality,” Quarterly Journal of Economics, 2013, 128 (3), 967–1015. Dauth, Wolfgang, Sebastian Findeisen, and Jens Südekum, “The rise of the East and the Far East: German labor markets and trade integration,” Journal of the European Economic Association, 2014, 12 (6), 1643–1675. _ , _ , and _ , “Adjusting to globalization – Evidence from worker-establishment matches in Germany,” CEPR Discussion Paper No. 11045 2016. Davis, Steven J. and John Haltiwanger, “Gross job creation, gross job destruction, and employment reallocation,” Quarterly Journal of Economics, 1992, 107 (3), 819–863. Dix-Carneiro, Rafael, “Trade liberalization and labor market dynamics,” Econometrica, 2014, 82 (3), 825–885. Dustmann, Christian, Bernd Fitzenberger, Uta Schönberg, and Alexandra Spitz-Oener, “From sick man of Europe to economic superstar: Germany’s resurgent economy,” Journal of Economic Perspectives, 2014, 28 (1), 167–188. _ , Johannes Ludsteck, and Uta Schönberg, “Revisiting the German wage structure,” Quarterly Journal of Economics, 2009, 124 (2), 843–881. _ , Uta Schönberg, and Jan Stuhler, “Labor supply shocks, native wages, and the adjustment of local employment,” Quarterly Journal of Economics, 2017, 132 (1), 435–483. Eaton, Jonathan and Samuel Kortum, “Technology, geography, and trade,” Econometrica, 2002, 70 (5), 1741–1779. Ebenstein, Avraham, Ann Harrison, Margaret McMillan, and Shannon Phillips, “Estimating the impact of trade and offshoring on American workers using the current population surveys,” Review of Economics and Statistics, 2014, 96 (4), 581–595. Eberle, Johanna, Peter Jacobebbinghaus, Johannes Ludsteck, and Julia Witter, “Generation of time-consistent industry codes in the face of classification changes. Simple heuristic based on the Establishment History Panel (BHP).,” FDZ Methodenreport 5 2011. Eckel, Carsten and J. Peter Neary, “Multi-product firms and flexible manufacturing in the global economy,” Review of Economic Studies, 2010, 77 (1), 188–217. _ and Michael Irlacher, “Multi-product offshoring,” European Economic Review, 2017, 94, 71–89. Egger, Hartmut and Daniel Etzel, “The impact of trade on employment, welfare, and income distribution in unionized general oligopolistic equilibrium,” European Economic Review, 2012, 56 (6), 1119–1135. _ and _ , “Union wage-setting and international trade with footloose capital,” Regional Science and Urban Economics, 2014, 48, 56–67. _ and Michael Koch, “Labour unions and multi-product firms in closed and open economies,” Canadian Journal of Economics/Revue canadienne d’économique, 2012, 45 (4), 1456–1479. _ , Udo Kreickemeier, and Jens Wrona, “Offshoring domestic jobs,” Journal of International Economics, 2015, 97 (1), 112–125. Feenstra, Robert C. and Gordon H. Hanson, “Foreign investment, outsourcing and relative wages,” in Robert C. Feenstra, Gene M. Grossman, and Douglas A. Irwin, eds., The Political Economy of Trade Policy: Papers in Honor of Jagdish Bhagwati, Cambridge, MA: MIT Press, 1996, chapter 6, pp. 89–127. _ and _ , “Foreign direct investment and relative wages: Evidence from Mexico’s maquiladoras,” Journal of International Economics, 1997, 42 (3), 371–393. _ and _ , “The impact of outsourcing and high-technology capital on wages: Estimates for the United States, 1979–1990,” Quarterly Journal of Economics, 1999, 114 (3), 907–940. Firpo, Sergio, Nicole M. Fortin, and Thomas Lemieux, “Occupational tasks and changes in the wage structure,” IZA Discussion Papers 5542, Institute for the Study of Labor (IZA) 2011. Gartner, Hermann, “The imputation of wages above the contribution limit with the German IAB employment sample,” FDZ Methodenreport 2 2005. Geishecker, Ingo, “Does outsourcing to Central and Eastern Europe really threaten manual workers’ jobs in Germany?,” World Economy, 2006, 29 (5), 559–583. Glitz, Albrecht, “The labor market impact of immigration: A quasi-experiment exploiting immigrant location rules in Germany,” Journal of Labor Economics, 2012, 30 (1), 175–213. Goldberg, Pinelopi K. and Nina Pavcnik, “Trade, wages, and the political economy of trade protection: Evidence from the Colombian trade reforms,” Journal of International Economics, 2005, 66 (1), 75–105. Goos, Maarten, Alan Manning, and Anna Salomons, “Explaining job polarization: Routine- biased technological change and offshoring,” American Economic Review, 2014, 104 (8), 2509–2526. Groizard, Jose L., Priya Ranjan, and Antonio Rodriguez-Lopez, “Offshoring and jobs: The myriad channels of influence,” European Economic Review, 2014, 72, 221–239. Grossman, Gene M. and Esteban Rossi-Hansberg, “Trading tasks: A simple theory of offshoring,” American Economic Review, 2008, 98 (5), 1978–1997. Hethey-Maier, Tanja and Johannes F. Schmieder, “Does the use of worker flows improve the analysis of establishment turnover? Evidence from German administrative data,” Schmollers Jahrbuch, 2013, 133 (4), 477–510. Hummels, David, Jakob R. Munch, and Chong Xiang, “Offshoring and labor markets,” Technical Report, National Bureau of Economic Research 2016. _ , Rasmus Jørgensen, Jakob R. Munch, and Chong Xiang, “The wage effects of offshoring: Evidence from Danish matched worker-firm data,” American Economic Review, 2014, 104 (6), 1597–1629. Johnson, Robert C. and Guillermo Noguera, “A portrait of trade in value-added over four decades,” Review of Economics and Statistics, 2017, 99 (5), 896–911. Leamer, Edward E. and Michael Storper, “The economic geography of the internet age,” Journal of International Business Studies, 2001, 32 (4), 641–665. Levy, Frank and Richard J. Murnane, The new division of labor, Princeton/NJ.: Princeton University Press, 2004. Lind, Jo Thori and Halvor Mehlum, “With or without U? The appropriate test for a U-shaped relationship,” Oxford Bulletin of Economics and Statistics, 2010, 72 (1), 109–118. Marin, Dalia, “A new international division of labor in Europe: Outsourcing and offshoring to Eastern Europe,” Journal of the European Economic Association, 2006, 4 (2-3), 612–622. Melitz, Marc J. and Gianmarco I. P. Ottaviano, “Market size, trade, and productivity,” Review of Economic Studies, 2008, 75 (1), 295–316. Neary, J. Peter, “Globalization and market structure,” Journal of the European Economic Association, 2003, 1 (2-3), 245–271. _ , “Cross-border mergers as instruments of comparative advantage,” Review of Economic Studies, 2007, 74 (4), 1229–1257. _ , “International trade in general oligopolistic equilibrium,” Review of International Economics, 2016, 24 (4), 669–698. Redding, Stephen J. and Daniel M. Sturm, “The costs of remoteness: Evidence from German division and reunification,” American Economic Review, 2008, 98 (5), 1766–1797. Rodríguez-Clare, Andrés, “Offshoring in a Ricardian world,” American Economic Journal: Macroeconomics, 2010, 2 (2), 227–258. Schmucker, Alexandra, Stefan Seth, Johannes Ludsteck, Johanna Eberle, and Andreas Ganzer, “Establishment History Panel 1975–2014,” FDZ data report 3 2016. Sethupathy, Guru, “Offshoring, wages, and employment: Theory and evidence,” European Economic Review, 2013, 62, 73–97. Spitz-Oener, Alexandra, “Technical change, job tasks and rising educational demands: Looking outside the wage structure,” Journal of Labor Economics, 2006, 24 (2), 235–270. Wright, Greg C., “Revisiting the employment impact of offshoring,” European Economic Review, 2014, 66, 63–83. |