Multinationals, Offshoring and the Decline of U.S. Manufacturing

Christoph E. Boehm · Aaron B. Flaaen · Nitya Pandalai-Nayar

28 citations0/0 files storedNational Bureau of Economic Research

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Global trade and economics International Business and FDI Outsourcing and Supply Chain Management

Abstract

We provide new facts about the role of multinationals in the decline in U.S. manufacturing employment between 1993 and 2011, using a novel microdata panel with firm-level ownership and trade information. Multinational-owned establishments displayed lower employment growth than a narrow control group and accounted for 41% of the aggregate decline. Newly multinational establishments experienced job losses, while their parent firms increased foreign input imports. We develop a model that rationalizes this behavior and bound a key elasticity with our microdata. The estimates imply that multinational offshoring was responsible for a sizable reduction in U.S. manufacturing employment.

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