Gains from Offshoring? Evidence from U.S. Microdata

51 Pages Posted: 17 Apr 2013

See all articles by Ryan Monarch

Ryan Monarch

Federal Reserve Board

Jooyoun Park

Kent State University

Jagadeesh Sivadasan

University of Michigan, Stephen M. Ross School of Business; University of Michigan at Ann Arbor - Survey Research Center

Multiple version iconThere are 2 versions of this paper

Date Written: April 01, 2013

Abstract

We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to micro-data from the U.S. Census Bureau. We exploit this data to assess how offshoring impacts domestic firm-level aggregate employment, output, wages and productivity. A class of models predicts that more productive firms engage in offshoring, and that this leads to gains in output and (measured) productivity, and potential gains in employment and wages, in the remaining domestic activities of the offshoring firm. Consistent with these models, we find that offshoring firms are on average larger and more productive compared to non-offshorers. However, we find that offshorers suffer from a large decline in employment (32 per cent) and output (28 per cent) relative to their peers even in the long run. Further, we find no significant change in average wages or in total factor productivity measures at affected firms. We find these results robust to a variety of checks. Thus we find no evidence for positive spillovers to the remaining domestic activity of firms in this large sample of offshoring events.

Suggested Citation

Monarch, Ryan and Park, Jooyoun and Sivadasan, Jagadeesh, Gains from Offshoring? Evidence from U.S. Microdata (April 01, 2013). US Census Bureau Center for Economic Studies Paper, No. CES-WP-13-20, Available at SSRN: https://ssrn.com/abstract=2252160 or http://dx.doi.org/10.2139/ssrn.2252160

Ryan Monarch (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
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Jooyoun Park

Kent State University ( email )

Department of Economics
College of Business
Kent, OH 44242
United States
(330) 672 - 1086 (Phone)

HOME PAGE: http://www.personal.kent.edu/~jpark8/index.htm

Jagadeesh Sivadasan

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

University of Michigan at Ann Arbor - Survey Research Center ( email )

Ann Arbor, MI
United States

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