Service Offshoring, Productivity and Employment: Evidence from the US

Mary Amiti · Shang‐Jin Wei

61 citations0/0 files storedRePEc: Research Papers in Economics

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Global trade and economics Economic Growth and Productivity Outsourcing and Supply Chain Management

Abstract

The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies. This paper estimates the effects of offshoring on productivity in US manufacturing industries between 1992 and 2000, using instrumental variables estimation to address the potential endogeneity of offshoring. It finds that service offshoring has a significant positive effect on productivity in the US, accounting for around 11% of productivity growth during this period. Offshoring material inputs also has a positive effect on productivity, but the magnitude is smaller accounting for approximately 5% of productivity growth. There is a small negative effect of less than half a percent on employment when industries are finely disaggregated (450 manufacturing industries). However, this affect disappears at more aggregate industry level of 96 industries indicating that there is sufficient growth in demand in other industries within these broadly defined classifications to offset any negative effects.

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References

1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 2001The nature and growth of vertical specialization in world trade 2014National and International Returns to Scale in the Modern Theory of International Trade 1996Globalization, Outsourcing, and Wage Inequality 1986Errors in variables in panel data 1999The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979-1990 2009Multinational Enterprises, International Trade, and Productivity Growth: Firm-Level Evidence from the United States 2004Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization

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2015The own-wage elasticity of labor demand: A meta-regression analysis 2011Services offshoring and wages: evidence from micro data 2012Trade and Employment in a Fast-Changing World 2015Global Value Chains in Africa 2013Outsourcing and firm productivity: a production function approach

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