Offshoring and Immigrant Employment: Firm-Level Theory and Evidence

39 Pages Posted: 10 Jun 2008

See all articles by Giorgio Barba Navaretti

Giorgio Barba Navaretti

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM); University of Milan - Centro Studi Luca d'Agliano (LdA)

Giuseppe Bertola

Centre for Economic Policy Research (CEPR); Università di Torino - Dip. di Economia e Statistica

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato

Date Written: March 1, 2008

Abstract

We propose and solve a simple model of firm-level decisions to offshore production stages of lower skill intensity than that of activities that remain in the domestic location. In theory, offshoring is optimal only for the more productive among heterogeneous firms if it entails a fixed cost. In a large sample of Italian firms, offshoring - especially of intermediate production stages - is indeed more prevalent among firms that are larger and more productive, and is predicted by arguably relevant firm-level characteristics. We also document that offshoring decreases the share of unskilled employment in domestic production facilities as well as firms propensity to employ immigrant workers, and we discuss the possible determinants and policy implication of the latter finding.

Keywords: Foreign Direct Investment, Migration, Outsourcing, Skilled Labour

JEL Classification: F2, J61

Suggested Citation

Barba Navaretti, Giorgio and Bertola, Giuseppe and Sembenelli, Alessandro, Offshoring and Immigrant Employment: Firm-Level Theory and Evidence (March 1, 2008). CEPR Discussion Paper No. DP6743, Available at SSRN: https://ssrn.com/abstract=1141649

Giorgio Barba Navaretti (Contact Author)

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy
+390250321521 (Phone)

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via Donizzatti 38
Milano, Mi 20122
Italy
+39 02 36683850 (Phone)

Giuseppe Bertola

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Università di Torino - Dip. di Economia e Statistica ( email )

Lungo Dora Siena 100
Torino, 10153
Italy
+39 011 670 4405 (Phone)

HOME PAGE: http://https://sites.google.com/site/gipbert

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy
+39 011 670 6059 (Phone)
+39 011 670 6062 (Fax)

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