Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-27T15:19:51.089Z Has data issue: false hasContentIssue false
  • English
  • Français

Does Offshoring Reduce Industry Employment?

Published online by Cambridge University Press:  26 March 2020

Alexander Hijzen  and
Paul Swaim
Alexander Hijzen*
Affiliation:
OECD and GEP, University of Nottingham
Paul Swaim
Affiliation:
OECD
*
e-mail: alexander.hijzen@oecd.org
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper looks at the implications of offshoring for industry employment whilst explicitly accounting for the scale and technology effects of offshoring. The effects of offshoring on employment are analysed using industry-level data for 17 high income OECD countries. Our findings indicate that offshoring has no effect or a slight-positive effect on sectoral employment. Offshoring within the same industry (intra-industry offshoring) reduces the labour-intensity of production, but does not affect overall industry employment. Inter-industry offshoring does not affect labour-intensity, but may have a positive effect on overall industry employment. These finding suggest that the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production sites.

Keywords

Internationsl ousourcinglabour demandF16
Type
Articles
Information
National Institute Economic Review , Volume 201 , July 2007 , pp. 86 - 96
Copyright
Copyright © 2007 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

This research was conducted as part of OECD project on Globalisation and Structural Adjustment III. The present paper is an extension to the analysis of offshoring that was published in Chapter 3 of OECD Employment Outlook 2007, ‘OECD workers in the global economy: increasingly vulnerable?’ The authors would like to thank Sébastian Martin for excellent research assistance. The authors are also grateful to Andrea Bassanini, Sven Blondal, Boris Cournede, Martine Durand, Sam Hill, Molly Lesher, Johan Martin, Nigel Pain and Raymond Torres for very helpful comments and suggestions on an earlier draft. The opinion expressed in this paper are those of the authors and do not necessarily reflect those of the OECD or its member states. All remaining error are our own.

References

Amiti, M. and Wei, S. (2005), ‘Fear of service outsourcing; is it justified?’, Economic Policy, 20, pp. 308–47.CrossRefGoogle Scholar
Amiti, M. and Wei, S. (2006), ‘Service offshoring, productivity and employment: evidence from the US’, CEPR Discussion Paper, No. 5475.Google Scholar
Amiti, M. and Ekholm, K. (2006), ‘The effect of offshoring on employment in rigid labor markets: evidence from EU countries’, mimeo.Google Scholar
Barba Navaretti, G. and Castellani, D. (2003), ‘Investments abroad and performance at home’, CEPR Discussion Paper, No. 4284.Google Scholar
Berman, E., Bound, J. and Griliches, Z. (1994), ‘Changes in the demand for skilled labor within U.S. manufacturing: evidence from the annual survey of manufacturers’, Quarterly Journal of Economics, 109, pp. 367–97.CrossRefGoogle Scholar
Campa, J. and Goldberg, L.S. (1997), ‘The evolving external orientation of manufacturing industries: evidence from four countries’, iFederal/i Reserve Bank of New York Economic Policy Review, 3, 2, pp. 53–81.Google Scholar
Clark, K.B. and Freeman, R.B. (1980), ‘How elastic is the demand for labor?’, Review of Economics and Statistics, 62, 4, pp. 509–20.Google Scholar
Ekholm, K. and Hakkala, K. (2006), ‘The effect of offshoring on labor demand: evidence from Sweden’, Scandinavian Journal of Economics (forthcoming).Google Scholar
European Commission (2005), Standard Eurobarometer 63: Public Opinion in the European Union, Brussels, European Union.Google Scholar
Feenstra, R.C. and Hanson, G.H. (1996), ‘Globalisation, outsourcing, and wage inequality’, American Economic Review, 86, 2, pp. 240–5.Google Scholar
Feenstra, R.C. and Hanson, G.H. (1999), ‘The impact of outsourcing and high-technology capital on wages: estimates for the United States, 1979-1990’, Quarterly Journal of Economics, 114, 3, pp. 907–41.CrossRefGoogle Scholar
Griliches, Z. and Hausman, J. (1986), ‘Errors in variables in panel data’. Journal of Econometrics, 31, pp. 93–118.CrossRefGoogle Scholar
Hamermesh, D. (1993), Labor Demand, Princeton, New Jersey, Princeton University Press.Google Scholar
Hanson, G., Mataloni, R. and Slaughter, M. (2005), ‘Vertical production networks in multinational firms’. Review of Economics and Statistics, November 87, pp. 664–78.CrossRefGoogle Scholar
Hijzen, A., Görg, H. and Hine, R. (2005), ‘International outsourcing and the skill structure of labour demand in the United Kingdom’, Economic Journal, 115, pp. 860–78.CrossRefGoogle Scholar
Hijzen, A., Inui, T. and Todo, Y. (2007), ‘Does offshoring pay? Firm-level evidence from Japan’, GEP Research Paper, 2007/14.CrossRefGoogle Scholar
Hummels, D., Ishii, J. and Yi, K. (2001), ‘The nature and growth of vertical specialisation in world trade’. Journal of International Economics, 54, pp. 75–96.CrossRefGoogle Scholar
Mankiw, N.G. and Swagel, P. (2006), ‘The politics and the economics of offshore outsourcing’, NBER Working Paper, No. 12398.Google Scholar
OECD (2007a), OECD Employment Outlook, Chapter 3, Paris, OECD.Google Scholar
OECD (2007b), Offshoring and Employment: Trends and Policy Implications, Paris, OECD (forthcoming).Google Scholar
Olsen, K.B. (2006), ‘Productivity impacts of offshoring and outsourcing: a review’, OECD Science, Technology and Industry Working Papers, 2006/1, Paris, OECD.Google Scholar
Rodrik, D. (1997), Has Globalisation Gone Too Far?, Washington, D.C., Institute for International Economics.Google Scholar