Offshoring and Labor Markets

97 Pages Posted: 1 Mar 2016

See all articles by David L. Hummels

David L. Hummels

Purdue University - Department of Economics; National Bureau of Economic Research (NBER)

Jakob Roland Munch

University of Copenhagen - Department of Economics; Center for Economic and Business Research (CEBR)

Chong Xiang

Purdue University - Krannert School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: February 2016

Abstract

We survey the recent empirical literature on the effects of offshoring on wages, employment and displacement. We start with the measurement of offshoring, focusing on the use of imported inputs that could have been produced by the importing firm. We overview key theories related to offshoring and its labor market effects and survey three waves of the literature on wage effects of offshoring: those using industry data, firm data, and worker data. For each wave we highlight the identification strategies used, critically assess strengths and weaknesses, discuss connections with theory, and draw out potential policy implications of its findings. Closely related, we address a new literature that looks at the differential impact of offshoring across occupations. Finally, we survey the literature that examines how offshoring affects employment and displacement. We highlight the recent development of a novel cohort-based approach that is specifically designed to address selection with displacement and capable of identifying the overall effects of offshoring, including wage changes, displacement, and other types of transitions.

Suggested Citation

Hummels, David L. and Munch, Jakob Roland and Xiang, Chong, Offshoring and Labor Markets (February 2016). NBER Working Paper No. w22041. Available at SSRN: https://ssrn.com/abstract=2739566

David L. Hummels (Contact Author)

Purdue University - Department of Economics ( email )

West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jakob Roland Munch

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 35323019 (Phone)
+45 35323000 (Fax)

HOME PAGE: http://www.econ.ku.dk/Faculty_And_Staff/showID.asp?profile_id=1260

Center for Economic and Business Research (CEBR)

Porcelaenshaven, Bldg 65
DK-2000 Frederiksberg
Denmark

Chong Xiang

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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