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Does Offshoring Reduce Industry Employment?

Published online by Cambridge University Press:  26 March 2020

Alexander Hijzen  and
Paul Swaim
Alexander Hijzen*
Affiliation:
OECD and GEP, University of Nottingham
Paul Swaim
Affiliation:
OECD
*
e-mail: alexander.hijzen@oecd.org
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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 finding 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

Internationsl ousourcinglabour demandF16
Type
Articles
Information
National Institute Economic Review , Volume 201 , July 2007 , pp. 86 - 96
Copyright
Copyright © 2007 National Institute of Economic and Social Research

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Footnotes

This research was conducted as part of OECD project on Globalisation and Structural Adjustment III. The present paper is an extension to the analysis of offshoring that was published in Chapter 3 of OECD Employment Outlook 2007, ‘OECD workers in the global economy: increasingly vulnerable?’ The authors would like to thank Sébastian Martin for excellent research assistance. The authors are also grateful to Andrea Bassanini, Sven Blondal, Boris Cournede, Martine Durand, Sam Hill, Molly Lesher, Johan Martin, Nigel Pain and Raymond Torres for very helpful comments and suggestions on an earlier draft. The opinion expressed in this paper are those of the authors and do not necessarily reflect those of the OECD or its member states. All remaining error are our own.

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