Does Offshoring Reduce Industry Employment?

U of Nottingham Research Paper No. 2007/24

28 Pages Posted: 11 Jul 2007

See all articles by Alexander Hijzen

Alexander Hijzen

Organization for Economic Co-Operation and Development (OECD)

Paul Swaim

Organization for Economic Co-Operation and Development (OECD) - Directorate for Employment, Labour and Social Affairs (ELS)

Date Written: July 2007

Abstract

This paper looks at the implications of offshoring for industry employment whilst explicitly accounting for the scale and technology effects of offshoring. The effects of offshoring on employment are analysed using industry-level data for 17 high income OECD countries. Our findings indicate that offshoring has no effect or a slight positive effect on sectoral employment. Offshoring within the same industry ("intra-industry offshoring") reduces the labour-intensity of production, but does not affect overall industry employment. Inter-industry offshoring does not affect labour-intensity, but may have a positive effect on overall industry employment. These findings suggest that the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production sites.

Keywords: international outsourcing, labour demand

JEL Classification: F16

Suggested Citation

Hijzen, Alexander and Swaim, Paul, Does Offshoring Reduce Industry Employment? (July 2007). U of Nottingham Research Paper No. 2007/24, Available at SSRN: https://ssrn.com/abstract=998427 or http://dx.doi.org/10.2139/ssrn.998427

Alexander Hijzen (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Paul Swaim

Organization for Economic Co-Operation and Development (OECD) - Directorate for Employment, Labour and Social Affairs (ELS) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France
331 45241977 (Phone)

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