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Offshoring and Skill-upgrading in French Manufacturing

Carluccio, Juan, Cuñat, Alejandro, Fadinger, Harald and Fons-Rosen, Christian (2019) Offshoring and Skill-upgrading in French Manufacturing Journal of International Economics, 118. pp. 138-159.

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Using French manufacturing firm-level data for the years 1996-2007, we uncover a novel set of stylized facts about offshoring behavior: (i) Low-productivity firms ("non-importers") obtain most of their inputs domestically. (ii) Medium-productivity firms offshore skill-intensive inputs to skill-abundant countries and are more labor intensive in their domestic production than non-importers. (iii) Higher-productivity firms additionally offshore labor-intensive inputs to labor-abundant countries and are more skill intensive than non-importers. We develop a model in which heterogeneous firms, subject to fixed costs, can offshore intermediate inputs of different skill intensities to countries with different skill abundance. This leads to endogenous within-industry variation in domestic skill intensities. We provide econometric evidence supporting the factor-proportions channel through which reductions in offshoring costs to labor-abundant countries have significantly increased firm-level skill intensities of French manufacturers.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
Cuñat, Alejandro
Fadinger, Harald
Fons-Rosen, Christian
Date : May 2019
DOI : 10.1016/j.jinteco.2019.01.001
Copyright Disclaimer : © 2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license
Uncontrolled Keywords : Offshoring; Heterogeneous firms; Firm-level factor intensities; Skill upgrading; Heckscher-Ohlin
Depositing User : Clive Harris
Date Deposited : 30 Jan 2019 09:21
Last Modified : 11 Aug 2020 02:08

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