Working Paper: CEPR ID: DP10855
Authors: Luisa Gagliardi; Simona Iammarino; Andrés Rodríguez-Pose
Abstract: This paper investigates the impact of the offshoring of production activities on domestic jobs in Great Britain. The paper considers both the spatial heterogeneity across local labour markets and variations in the intensity of outward flows of investments abroad (OFDI) across industries in order to shed new light on the job creation/destruction implications of offshoring. The results suggest that offshoring may generate significant job losses in routine occupations in areas that have been more exposed to the relocation of production abroad, regardless of whether the relocation has been to developed or developing/emerging countries. Offshoring to developing/emerging countries has, by contrast, a positive effect on the generation of non-routine jobs. Efficiency gains accruing from the international reorganization of production increase in the long-run, with compensation mechanisms operating through growth of employment in higher value added activities at home. Overall, our results uncover important spatial and interpersonal inequalities in job creation, which provide new challenges for public policy.
Keywords: Job creation and destruction; Local labour markets; Offshoring; Routine and nonroutine occupations
JEL Codes: F21; F66; J23; J24; J42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Offshoring (F23) | Decline in routine occupations (J29) |
| Increase in financial investments abroad (F21) | Decline in routine occupations (J29) |
| Offshoring to developing countries (F63) | Positive effect on nonroutine occupations (J29) |
| Offshoring (F23) | Decline in cognitive routine occupations (J26) |
| Offshoring (F23) | Decline in manual routine occupations (J29) |
| Local exposure to offshoring (F69) | Decline in routine occupations (J29) |